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Capital gain Bonds

Bonds

A bond is a debt instrument, in which the authorised issuer owes the bond holders a debt, and depending on the terms of the bond is obliged to pay interest (the coupon) and/or repay the principal at a later date, termed maturity. (It is a formal contract to repay borrowed money with an interest at fixed intervals). When you purchase a bond, you are lending money to the issuer, which may be a government, corporation, federal agency, or other entity. In return for the loan, the issuer promises to pay a specified rate of interest during the life of the bond, and also to repay the face value of the bond or the principal when it "matures" or becomes due.

8% GOI Taxable Bonds
Capital Gain Bonds
Forms Download
 
Taxable 8% Savings Bonds, 2003 are issued by Government of India with effect from 21st April 2003

Eligibility for Investments

  • An individual, not being a Non-Resident Indian
  • In his or her individual capacity
  • In individual capacity on anyone or survivor basis
  • In individual capacity on joint basis
  • On behalf of a minor as father/mother/legal guardian
  • A Hindu Undivided Family (HUF)
  • 'Charitable Institution' to mean a Company registered under Section 25 of the Indian Companies Act 1956
  • An institution which has obtained a Certificate of Registration as a charitable institution in accordance with a law in force.
  • An institution which has obtained a certificate from Income Tax Authority for the purposes of Section 80G of the Income Tax Act, 1961.
  • "University" means a university established or incorporated by a Central, State or Provincial Act, and includes an institution declared under section 3 of the University Grants Commission Act, 1956 (3 of 1956), to be a university for the purposes of that Act.
Limit of Investment

There will be no maximum limit for investment in these Bonds.

Nomination

A sole holder or a sole surviving holder of a Bond, being an individual, may nominate one or more persons who shall be entitled to the Bond and the payment thereon in the event of his/her death.

Advances/Tradability against Bonds

The Bonds shall NOT be tradable in the secondary market and cannot be offered as collateral for loans from banks, financial Institutions and Non Banking Financial Companies, (NBFC) etc.

Transferability

The Bond in the form of Bond Ledger Account shall NOT be transferable.

Tax Treatment

Interest income from the Bonds is taxable. TDS is deducted at the time of interest payment as per the prevailing IT Rules.

Interest

The bond will be issued in cumulative and non-cumulative form, at the option of the investor.

The Bond will bear interest at the rate of 8% per annum. Interest to the holders opting for non-cumulative Bonds will be paid from date of issue up to 31st July/31st January, as the case may be and thereafter at half-yearly for period ending 31st July/31st January on 1st August and 1st February.

Interest on cumulative bonds will be compounded with half-yearly rests and will be payable on maturity along with the principal. The maturity value of the Bonds shall be Rs.1601/- (being principal and interest) for every Rs.1,000/-(Nominal). Interest on Bond in the form of “Bond Ledger Account” will be paid, by cheque / warrant or through ECS credit to bank account of the holder as per the option exercised by the investor/holder.

Repayment

The Bonds shall be repayable on the expiry of 6 (Six) years from the date of issue.

No interest would accrue after the maturity of the bond.

Taxable 8% Savings Bonds, 2003 are issued by Government of India with effect from 21st April 2003

Eligibility for Investments

Capital Gain Bonds are instruments offering you tax exemption for transferring gains of long term capital assets. As per provisions of Income Tax Act, 1961, any long term capital gains arising from transfer of any capital asset would be exempt from tax under Section 54 EC of the Act if ;
  • The entire capital gain realized is invested within 6 Months of the date of transfer in eligible bonds Such investment is held for 3 Years
  • To avail of capital gain exemption, the bonds so acquired cannot be transferred or converted into money or any loan or advance can be on security of such bond with 3 years from date of acquisition else, the benefit would be withdrawn.
  • If the amount invested in bonds is less than the capital gains realized, only proportionate capital gains would be exempt from tax.
The eligible bonds under Section 54EC are;
  • National Highways Authority of India ( NHAI )
  • Rural Electrification Corporation Ltd. ( REC )
Company Name Rate Rating Tenure Tax Status Tax Benefit Face Value of Each Bond Minimum Application Maximum Application Mode of Interest Transferability
National Highways
Authority of India (NHAI)
6% AAA 3 years Taxable SEC 54EC 10,000 50,000
(Five Bond)
50 lacs Annual Not Allowed
Rural Electrification
Corporation Ltd. (REC)
6% AAA 3 years Taxable SEC 54EC 10,000 50,000
(Five Bond)
50 lacs Annual Not Allowed

Upcoming Issues

  • Sr.No.
  • Issues Name
  • Aggregate Amount to raise
  • 1
  • Indian Railway Finance Corporation (IRFC)
  • 6,000 cr
  • 2
  • National Highway Authority of India (NHAI)
  • 24,000 cr
  • 3
  • Power Finance Corporation (PFC))
  • 1,000 cr
  • 4
  • Rural Electrification Corporation (REC)
  • 1,000 cr
  • 5
  • Housing and Urban Development Corporation (HUDCO)
  • 5,000 cr
  • 6
  • NTPC Limited
  • 1,000 cr
  • 7
  • Indian Renewable Energy Development Agency Ltd(IREDA)
  • 2,000 cr
Taxable 8% Savings Bonds, 2003 are issued by Government of India with effect from 21st April 2003

Sr No. Form Name View
1 HDFC 8 pct RBI Bond Cumulative Download
2 HDFC 8 pct RBI Bond Cumulative Download

Upcoming Issues

  • Sr.No.
  • Issues Name
  • Aggregate Amount to raise
  • 1
  • Indian Railway Finance Corporation (IRFC)
  • 6,000 cr
  • 2
  • National Highway Authority of India (NHAI)
  • 24,000 cr
  • 3
  • Power Finance Corporation (PFC))
  • 1,000 cr
  • 4
  • Rural Electrification Corporation (REC)
  • 1,000 cr
  • 5
  • Housing and Urban Development Corporation (HUDCO)
  • 5,000 cr
  • 6
  • NTPC Limited
  • 1,000 cr
  • 7
  • Indian Renewable Energy Development Agency Ltd(IREDA)
  • 2,000 cr

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  • Know More
    About Bonds

Online Bonds

  • A Bond is a debt instrument issued for the purpose of raising capital by borrowing.
  • Bonds can be issued by companies, financial institutions or the government. Bonds issued by the government are considered the safest bonds.
  • Bonds can be divided into different categories based on tax status, credit rating, issuer type and maturity.
  • Bonds are suitable for regular income purposes.
  • Specific tax saving or tax free bonds are available that offer certain tax benefits to the investor.

Floating Rate Savings Bonds, 2020 (Taxable)

  • The government has launched Floating Rate Savings Bonds, 2020 (Taxable) with an interest rate of 8.05 per cent. The bonds are available for subscription July 1, 2020 onwards. The interest rate on these bonds will be reset every six months, the first reset being on January 01, 2021

Tenure ROI(%) P.A Issue Price Payable
7 Years 8.05%(Reset on 1st Jan & 1st July) Rs.1000 Half Yearly
DOWNLOAD FORM
Salient Features
  • Eligibility for Investments
  • The Bonds may be held by An individual, not being a Non-Resident Indian (NRI) , A Hindu Undivided Family.
  • Limit of Investment
  • There will be no maximum limit for investment in the Bonds.
  • Tax Treatment
  • Interest on the Bonds will be taxable under the Income-tax Act, 1961as amended from time to time and as applicable according to the relevant tax status of the Bonds holder.
  • Issue Price
  • The Bonds will be issued at par at Rs.100/-for a minimum amount of Rs.1000/- (face value) and in multiples thereof.
  • Date of Issue
  • The Bonds will be issued, in electronic form and credited to the Bond Ledger Account (BLA) of the Investor/s on the date of the tender of cash or the date of realization of draft/cheque/funds.
  • Subscription
  • Subscription to the Bonds will be in the form of Cash (uptoRs.20,000 only)/drafts/cheques or any electronic mode acceptable to the Receiving Office

    • Subscription to the Bonds will be in the form of Cash (uptoRs.20,000 only)/drafts/cheques or any electronic mode acceptable to the Receiving Office.
    • Cheques or drafts should be drawn in favour of HDFC Bank RBI Floating Rate Saving Bond 2020 (Taxable) and payable at the place where the applications are tendered.

    (+)
  • Nomination
  • A sole holder or all the joint holders (investors) of Bonds, being individual/s, may nominate in Form C or as near thereto as may be, one or more persons who in the event of death of sole holder / joint holder, as the case may be, would be entitled to the Bonds and to the payment thereon.
  • Transferability
  • The Bonds in the form of Bond Ledger Account shall not be transferable except transfer to a nominee(s)/legal heir in case of death of the holder of the bonds.
  • Interest Rate(Floating)
  • The interest on the bonds is payable semi-annually on 1st Jan and 1st July every year.

    • The interest on the bonds is payable semi-annually on 1st Jan and 1st July every year.
    • The coupon on 1st January 2021 shall be paid at 7.15%. The Interest rate for next half-year will be reset every six months, the first reset being on January 01, 2021.
    • The coupon on 1st January 2021 shall be paid at 7.15%. The Interest rate for next half-year will be reset every six months, the first reset being on January 01, 2021. There is no option to pay interest on cumulative basis.

    (+)
  • Tax Deduction at Source
  • Tax deducted at source while making payment of interest on the bonds from time to time and credited to Government Account.

    • Tax deducted at source while making payment of interest on the bonds from time to time and credited to Government Account.
    • Provided that tax will not deducted while making payment of interest/maturity proceeds as the case may be to individual/s who have made a declaration in the application form that they have obtained exemption from tax under the relevant provisions of the Income Tax Act, 1961 as amended from time to time and have submitted a true copy of the certificate obtained from Income Tax Authorities.

    (+)
  • Repayment/Tenor
  • The Bonds shall be repayable on the expiration of 7 (Seven) years from the date of issue.

    • The Bonds shall be repayable on the expiration of 7 (Seven) years from the date of issue.
    • II. Premature encashment in respect of the Bonds be allowed for individual investor in the age group of 60 years and above, subject to submission of document relating to the date of birth of the investor in support of age to the satisfaction of the issuing bank, after minimum lock in period from the date of issue as indicated below:

        a. Lock in period for investors in the age bracket of 60 to 70 years shall be 6 years from the date of issue.
        b. Lock in period for investors in the age bracket of 70 to 80 years shall be 5 years from the date of issue.
        c. Lock in period for investors in the age bracket of 80 and above years shall be 4 years from the date of issue.
    • III. In case of join holders or more than two holders of Bonds any one of the holder of bonds any one of the holders shall fulfill the above conditions of eligibility.
    • IV. After aforesaid minimum lock in period from the date of issue an eligible investor can surrender the bonds any time after 12th 10th and 8th half corresponding to the respective lock in period but redemption payment will be made on the following interest payment due date. Thus the effective date of premature encashment for eligible investor will be 1st January and 1st July every year. However, 50% of interest due and payable for the last six months of the holding Period will be recovered in such cases.

    (+)

Capital Gain Bonds

  • In accordance with section 54 EC of the Income Tax Act, 1961, all categories of tax payers would be eligible to save tax in respect of long term capital gains by making investments in certain Bonds prescribed.
  • These bonds are classified as 'long-term specified asset' and are issued by REC, NHAI, PFC and IRFC.
  • These bonds are specifically for investors who have made some long term capital gains, and would like to save capital gain taxes on this amount.
  • Only long term capital gains are eligible for these bonds though, and short term gains are not covered under section 54EC.
  • The interest from these bonds is fully taxable

Condition for Exemption from Tax U/S 54 EC:

  • The entire capital gain realized is invested within 6 Months of the date of transfer in eligible bonds
  • Such investment is held for 5 Years
  • To avail of capital gain exemption, the bonds so acquired cannot be transferred or converted into money or any loan or advance can be on security of such bond with 3 years from date of acquisition else, the benefit would be withdrawn.
  • If the amount invested in bonds is less than the capital gains realized, only proportionate capital gains would be exempt from tax.

REC Capital Gains Bonds

  • Rural Electrification Corporation Limited (REC) is a Navratna Company functioning under the purview of the Ministry of Power.
  • It’s a public Infrastructure Finance Company in India’s power sector.
  • The company finances and promotes rural electrification projects across India.
  • The company provides loans to Central/ State Sector Power Utilities, State Electricity Boards, Rural Electric Cooperatives, NGOs and Private Power Developers.
  • The company is listed on both National Stock Exchange and Bombay Stock Exchange.
  • Business operations in India are supported by a network of 13 Project Offices and 5 Zonal Offices, headquartered in New Delhi.

Rural Electrification Corp Bonds

Company Name Rating ROI (%) Tenure Minimum Application Maximum Application Tax Status Transferability Mode of Interest Interest Payable on
REC AAA 5.25% 5 years 20000
(2 bonds)
5000000
(500 Bonds)
Taxable Not Allowed Annually 30th June
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PFC Capital Gain Bonds

  • The Power Finance Corporation Ltd. Incorporated on July 16th, 1986, Company was conferred the title of a 'Navratna CPSE' in June, 2007 and it’s a leading Non-Banking Financial Corporation in the Country.
  • It is the financial back bone of Indian Power Sector.
  • PFC's registered office is located at New Delhi and regional offices are located at Mumbai and Chennai.
  • It’s a consistently profit-making and dividend-paying company & also Strong asset quality reflected in low NPAs in the company.The company is listed on both National Stock Exchange and Bombay Stock Exchange

Power Finance Corporation Capital Gain Bonds

Company Name Rating ROI (%) Tenure Minimum Application Maximum Application Tax Status Transferability Mode of Interest Interest Payable on
PFC AAA 5.25% 5 years 20000
(2 bonds)
5000000
(500 Bonds)
Taxable Not Allowed Annually 31st July
DOWNLOAD FORM
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IRFC Capital Gain Bonds

  • Indian Railway Finance Corporation (IRFC) was set up on 12th December, 1986 as the dedicated financing arm of the Indian Railways for mobilizing funds from domestic as well as overseas Capital Markets.
  • IRFC is a Schedule ‘A’ Public Sector Enterprise under the administrative control of the Ministry of Railways, Govt.
  • In more than 30 years of existence, IRFC has played a significant role in supporting the expansion of the Indian Railways and related entities by financing a significant proportion of its annual plan outlay.
  • Company raises money through financial bonds and from banks and financial institutions.

Indian Railway Finance Corporation Capital Gain Bonds

Company Name Rating ROI (%) Tenure Minimum Application Maximum Application Tax Status Transferability Mode of Interest Interest Payable on
IRFC AAA 5.25% 5 years 20000
(2 bonds)
5000000
(500 Bonds)
Taxable Not Allowed Annually 15th October
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