SBI Capital Gain Bonds 54EC
SBI Capital Gain Bonds are also known as 54 EC Bonds.
These bonds offer tax exemption on long-term capital gains tax.
These bonds are meant for investors who have earned capital gains & would like to save capital gains tax on them. Although, these 54 EC bonds do not allow any tax exemption for short-term capital gains tax (STCG). The gains thus registered are invested within 6 months of the date of transfer across eligible bonds.
Also Read List of Government Bonds in India – Short-Term and Long-Term Bonds
For Instance,
If you have a residential property worth INR 10 lakhs and you sell it for INR 15 leaks, then you make a capital gain of INR 5 lakhs. Therefore, you have to pay tax on the profit that you made from selling the residential property.
Now you have 3 options open:
- Pay the Capital Gains Tax.
- To purchase another asset.
- To dispose of the amount of tax-free SBI capital gain bonds for a long term
Some common capital assets include property, jewelry, shares, etc.
The SBI Capital Gain Bonds are not only AAA (CRISIL) rated but are backed by the Government of India also.
Investors have to keep in mind that returns on these Bonds are taxable and you can invest a maximum of Rs 50L in these bonds in a financial year,
while the minimum investment is one bond amounting to Rs 10,000.
while returns on Capital Gain Bonds are taxable, no tax is deducted at source (TDS) on interest from bonds, and wealth tax is exempted.
Here’s a quick look at all features.
Also Read Capital Gain Bonds | Interest Rate | NHAI | REC | PFCL | IRFC | How to Buy Online? |
54EC Features
| Lock-in period | 5 years. The automatic option is available for redemption after 5 Years. |
| Rate of Interest | 5.75% per annum payable annually. |
| Taxation | Interest is taxable. However, no TDS is deducted. |
| Rating | AAA-rated (CRISIL) |
| Mode of Holding | Physical or Demat |
| Minimum Limit | 1 Bond (Rs. 10,000). |
| Maximum Limit | 500 Bonds (Rs 50,00,000 Lacs) in a financial year. |
| Transferability | Non-transferable, Non-Marketable, and Non-Negotiable. These Bonds are not listed on any stock exchange. |
| Loan against bonds | Cannot be offered as a security for any loan. |
| Prematurity | Not available. |
| Nomination | Available for the deposits (Up to 3 Nominees can be nominated). |
| Senior Citizen | No additional interest is paid to senior citizens. |
| Facility of Payment | Interest and Redemption through NECS. |
Also Read RBI IINSS-C Bonds Inflation Indexed National Savings Securities-Cumulative
Eligibility
- Resident Individuals, Body of individuals.
- Hindu Undivided Family (HUF), Sole Proprietorship firms,
Partnership firms, Companies, associations of persons, etc. - Non-resident Indians (NRIs).
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Documents Required
The investors are required to provide documents like Aadhar Card, PAN Card, Photocopy of Cancelled cheque, self-attested copy of address proof, etc., along with accompanying the application form and cheque.
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SBI Capital Gain Bonds Interest Rate 2023
| Issuer Name | Interest rate (%) |
|---|---|
| Rural Electrification Corporation Limited (REC) | 5.75 |
| National Highway Authority of India (NHAI) | 5.75 |
| Power Finance Corporation Limited (PFC) | 5.75 |
| Indian Railways Finance Corporation Limited(IRFC) | 5.75 |
Also Read Sovereign Gold Bond: Best Returns on Gold Investment | 2023 Dates
Benefits of SBI Capital Gain Bonds
| Risk factors | These Bonds are pretty safe as they are AAA-rated by the CRISIL and issued by established Public Sector Undertaking. |
| Tax benefits | Capital Gain Bonds also called Tax-Free Bonds, assist you to save taxes. These Bonds are issued as per the provisions under section 54-EC of the Income Tax Act 1961. |
| Earn interest | These bonds offer an attractive rate of interest. Therefore, enhancing your gains. |
Also Read What are the Treasury Bills in India? – Maturity Period | Features | Issued by
Before jumping on the “How to Invest?”, Let us quickly talk about the SBI’s CapGains Plus account.
What is SBI’s CapGains Plus Account?
Investors can invest the amount in SBI Capgains Plus under the Capital Gains Account Scheme 1988.
And then you are eligible to claim exemption of LTCG i.e. Long Term Capital Gains Tax on sale of Capital Assets.
Here’s a quick look at all features of Capgains Plus account.
| Benefit | 1. Adequate time to acquire the new asset of your liking 2. Earn interest at Savings Bank or Fixed Deposit rates as you wait. |
| Account Type | Savings Bank Account (Deposit Account-A) and Term Deposits (TDR / STDR) (Deposit Account-B) |
| Eligibility | 1. Individuals. 2. HUF, Sole Proprietorship firms, partnership firms, companies, associations of person, etc. 3. NRI’s 4. Resident but not ordinary Residents. 5. Artificial Judicial Person who has capital gains, taxable in India. |
| Minimum & Maximum Amount | INR 1,000/- in case of CapGains Term Deposits & No upper ceiling |
| Period of Deposit | Not exceeding 2 to 3 years from the date of transfer of original asset as given below 1. Max 24 months – if capital gains are U/s 54, 54B, 54 F. (As declared in Form A by the depositor) 3. Max 36 months – if capital gains are U/s 54, 54 D, 54 F, 54 G & 54GB (As declared in Form A by the depositor) |
| Interest Rate | As applicable to a normal Savings Bank account. However, No additional interest rate benefits for Senior Citizens. |
| Coverage | This scheme is operative at all branches except Rural branches. |
| Loan facility | No |
| Nomination | Yes |
| Transfer of Account | The account can be transferred from one branch to another branch. |
| Closure/Premature Payment | Specific Authority Letter/Certificate from the IT Office of the respective jurisdiction must be produced at the time of closure of all accounts. |
How to Buy SBI Capital Gain Bonds?
Also Read RBI RDG Account – Buy & Sell Capital Gain Bonds, T-bills, and State Development Loans
Time needed: 5 minutes.
Follow the steps given below for applying for bonds through SBI.
- SBI CapGains Plus scheme
Please click here for the application form for opening an account under the SBI CapGains Plus scheme.
- Documents Required
An account opening form needs to be filled out along with mandatory documents like copy of the PAN card, address proof, and photographs.
- SBI Account
In case, You are not an SBI customer please open an account and then submit the application form for CapGains Plus.
- Application Form of Issuer Company(Offline)
Investors have to fill out the Application form for the Bonds in block letters in English.
The application form must be submitted along with a DD i.e. demand draft or cheque of the amount decided by the investors to invest in the bonds.
The application money is to be paid by way of the account payee in favor of the issuer’s name.
Recommended Article – How to Buy Capital Gain Bonds Online? - Verification Process
The issuer will verify all the application forms along with documents and issue the bonds upon their satisfaction.
- Allotment of Bonds
The bonds will be allotted by the issuer on the last day of each month to the applicants whose application form and documents have been received and monies realized and credited in the company account till that date.
Recommended Article – Allotment Status
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