54 EC Bonds or capital gains bonds as they are known, offer tax exemption on long term capital gains tax. These bonds are specifically meant for the investors who have earned long term capital gains & would like to save capital gains tax on them. However, these bonds do not allow any tax exemption on short term capital gains tax.
Companies that issue these bonds enjoy high credit rating as they are mostly government backed entities& they come with a minimum lock-in period of 3 years. Interest earned on these bonds are not tax free & are taxed at marginal rate of income tax as per the tax slab you fall into, however thereis no TDS deducted.
Features of 54 E(c) Bonds:
|| Minimum Investment: Rs 10000& in multiples|
|| Maximum Investment: Rs 5000000 (Under section 54EC, maximum investment allowed in these bonds is not more than Rs 5000000 during a financial year.|
|| These bonds can be subscribed in Physical and Demat |
Other Tax-Saving Options:
As per the newly introduced Section 80-CCG, RGESS scheme is available only to a "New Retail Investor" on investments in the 'Eligible Securities' and offering tax exemption up to Rs. 25,000.