54EC Capital Gain Bonds for 2022-23: What It Means for Investors
The National Highways Authority of India (NHAI) has made the decision to discontinue the offering of "54EC capital gain bonds" for the fiscal year 2022-23. This move was prompted by the government's directive to exercise caution in borrowing for the next three years to avoid accumulating excessive debt. As of January 2022, NHAI already had a substantial debt burden of approximately ₹3.44 trillion.
Starting from September 3, 2022, NHAI has instructed banks not to accept new applications or funds for these bonds. Investors who have deposited money into these bonds after this date will be eligible for refunds. However, NHAI will not assume responsibility for investors seeking to utilize these bonds as a means to reduce their tax liability on capital gains. Such investors will need to liaise with the banks or financial institutions they engaged with for this purpose.
It's important to note that 54EC capital gain bonds serve a specific purpose: encouraging individuals to reinvest proceeds from property sales while providing a tax-saving avenue. By investing in these bonds, investors can defer their tax payments and potentially earn interest on their investments. These bonds have a fixed interest rate of 5.25% per annum, and the interest earned is subject to income tax.
Moreover, 54EC bonds come with a lock-in period of five years, effective from April 2018. During this period, investors are unable to withdraw their invested funds. Once this lock-in period expires, the initial investment amount can be retrieved without incurring additional tax implications.
These bonds are typically issued by government-backed institutions such as the Rural Electrification Corporation (REC), Indian Railway Finance Corporation (IRFC), and Power Finance Corporation (PFC)
The National Highways Authority of India (NHAI) has made the decision to discontinue the offering of "54EC capital gain bonds" for the fiscal year 2022-23. This move was prompted by the government's directive to exercise caution in borrowing for the next three years to avoid accumulating excessive debt. As of January 2022, NHAI already had a substantial debt burden of approximately ₹3.44 trillion.
Starting from September 3, 2022, NHAI has instructed banks not to accept new applications or funds for these bonds. Investors who have deposited money into these bonds after this date will be eligible for refunds. However, NHAI will not assume responsibility for investors seeking to utilize these bonds as a means to reduce their tax liability on capital gains. Such investors will need to liaise with the banks or financial institutions they engaged with for this purpose.
It's important to note that 54EC capital gain bonds serve a specific purpose: encouraging individuals to reinvest proceeds from property sales while providing a tax-saving avenue. By investing in these bonds, investors can defer their tax payments and potentially earn interest on their investments. These bonds have a fixed interest rate of 5.25% per annum, and the interest earned is subject to income tax.
Moreover, 54EC bonds come with a lock-in period of five years, effective from April 2018. During this period, investors are unable to withdraw their invested funds. Once this lock-in period expires, the initial investment amount can be retrieved without incurring additional tax implications.
These bonds are typically issued by government-backed institutions such as the Rural Electrification Corporation (REC), Indian Railway Finance Corporation (IRFC), and Power Finance Corporation (PFC)