Capital Gain Bonds are a tax-saving investment option designed to help investors defer or
avoid long-term capital gains tax. When you sell a long-term asset, you can invest the
proceeds in these bonds to save on tax.
Key Features :
ax Benefits: Save on long-term capital gains tax under Section 54EC
of the
Income Tax Act.
Eligible Investors: Available for individuals, HUFs, companies, and
NRIs.
Lock-in Period: Mandatory 5-year lock-in period.
Interest Rate: Typically 5% to 6% annually.
Issuers: Government-backed institutions like NHAI , REC and PFC.
Benefits :
Tax Savings: Defers or avoids capital gains tax.
Secure Investment: Backed by government entities.
Fixed Returns: Annual interest income.
Sovereign gold bonds:
Sovereign Gold Bonds (SGBs) are government securities issued by the Reserve Bank of India
(RBI) and denominated in grams of gold. They offer a secure and efficient way to invest in
gold without the hassles of physical storage.
Key Features :
Safety: No risks associated with storing physical gold.
Interest Income: Earn fixed interest along with potential gold price
appreciation.
Liquidity: Tradable on stock exchanges.
Tax Efficiency: Capital gains tax exempt on redemption.