54EC bonds, which are also known as capital gains bonds, are a sought-after investment option due to the tax benefits they offer. 54EC bonds are provided by designated government entities, making them secure especially for the purpose of saving tax on long-term capital gains.

 

With the introduction of 54EC bonds, the government has taken a step towards encouraging investments in various sectors like the Power Finance Corporation (PFC), National Highway Authority of India (NHAI), Rural Electrification Corporation (REC), and Indian Railway Finance Corporation (IRFC).

 

Read on to know more about 54EC bonds, interest rate on 54EC bonds, online provisions available for investing, and more.

Primary Goal of Investing in 54EC Bonds

Investing in 54EC bonds helps you get tax exemption on your capital gains. When you sell a capital asset/immovable property, you can reinvest the proceeds in 54EC bonds to get tax benefits. This can help you lower your capital gains tax liability, and potentially lower your overall tax burden. Making a calculated investment in 54EC bonds can optimise your tax outgo and offer the benefits of diversification too.

Key Features of 54EC Bonds

54EC bonds have a few notable features that make them stand out from the other bond investments available. They are as follows.

Safe Investment

54EC bonds are government-backed bonds that provide a great level of safety for your funds. An investment in these bonds means you are invested in organisations like REC, PFC, NHAI and IRFC. Since these are government-backed organisations, these bonds are safe.

Moderate Returns

The interest rates provided on these bonds are paid annually, usually between 5-5.25% p.a. Therefore, these bonds help you generate a regular income.

Long-term Investment

54EC bonds are considered long-term investments since these investments have a lock-in period of 5 years. This investment arena needs you to commit your funds for a longer term, and this can be a benefit. For some, it can work toward long-term goals with relative ease. For others, a long-term investment can serve as an easy way to prevent erosion of wealth that occurs due to inflation.

Various Investment Amounts

With 54EC bonds, you have the flexibility of choosing your investment amount. You can choose an investment amount ranging between ₹10,000 and ₹5 Lakhs. This means that you can tailor your investment based on your financial capabilities and objectives. The low minimum investment also means that you can started without needing a large corpus

Benefits of Investing in 54EC Bonds

Here are the benefits that you get by investing in 54EC Bonds.

1. Save on Tax

A benefit of 54EC bonds is that you get an opportunity to save on tax. This benefit is behind the growing demand for these funds since this helps you lower your tax liability. With 54EC bonds, you can reinvest your capital gains proceedings to claim tax exemption on this amount.

2. Fixed Interest Rate

With 54EC bonds, you generally get fixed interest rates. The interest does not fluctuate with market conditions or any other factors. This helps you get a predictable income, which is key for financial stability. The returns can also be beneficial to cover unexpected or planned expenses.

3. Security of Funds

As these bonds are issued by government-backed entities, you enjoy a great deal of capital security. There is minimal risk involved in investing your money, and this is crucial if you plan to stay invested for the long-term. In fact, this benefit makes it a viable choice for investors with varying risk appetites, as it works to diversify the portfolio efficiently.

4. Holding of Your Preference

You also get the benefit of choosing the mode of holding this investment. You can choose from a physical form or an electronic form, based on your preference. Along with that, you can easily purchase the 54EC bonds online.

How to Choose the Best 54EC Bonds

To choose the best option while investing in 54EC bonds, you need to familiarise yourself with the bonds issuing parties. This includes the REC, NHAI, PFC and IRFC. Gather information about their track record, financial stability, future outlook, and credibility.

 

Whether you’re looking to buy 54EC bonds online or invest in the equities market, visit Bajaj Markets to get started. The online process is simple, requires minimal effort, and completely safe.

 

Remember, investing is crucial to safeguard your wealth, and it requires your time and effort. Like every investment, 54EC bonds also require you to get acquainted with the benefits you will get from this investment arena and the associated risks. Researching and comparing various options can help you choose the best investment plan, helping you generate better returns.

Disclaimer

You are being redirected to the third party web-application. However, we would want to appraise you that “Investments in debt securities are subject to market risks. Please read all the offer related documents/information carefully before investing."

FAQs on 54EC Bonds

Yes, 54EC bonds are safe investment instruments that provide a decent return on investment. However, if you’re new to the subject of tax-free bonds, it’s best to do your due diligence before investing in them.

The minimum amount that you need to invest in 54EC bonds is ₹10,000.

Since 54EC bonds are issued by government-backed entities, the risk level associated with these investment types is generally low. However, some of them include interest rate changes, default by the issuing entity, and revisions in government policies, among others.

Yes. 54EC bonds come with a lock-in or maturity period of five years.

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