Compute tax exemption on Long Term Capital Gains from real estate sale by investing in 54EC Bonds (NHAI, REC, PFC, IRFC) up to ₹50 Lakhs.
LTCG on transfer of land or building.
Statutory ceiling: Max ₹50,00,000 / FY.
54EC bonds feature a mandatory 5-year lock-in period with zero premature redemption or loan pledge capability. Annual interest rate is currently ~5.25% p.a. (taxable).
Full ₹50 Lakh statutory cap utilized for tax saving.
Section 54EC of the Income Tax Act provides capital gains tax exemption on Long Term Capital Gains arising from the transfer of land, building, or both (residential or commercial immovable property), provided the gain is invested in specified government infrastructure bonds within 6 months.
• Real Estate Only: LTCG from shares, mutual funds, or gold CANNOT be invested in 54EC bonds.
• ₹50 Lakh Limit: Maximum investment allowed is ₹50 Lakhs per financial year across all issues.
• 6-Month Deadline: Must invest strictly within 6 months from property sale deed execution date.
| Feature | Statutory Rule |
|---|---|
| Eligible Asset Sold | Land or Building or both (Long-Term only) |
| Maximum Investment Cap | ₹50,00,000 (Fifty Lakhs) |
| Mandatory Lock-in Period | 5 Years (Non-transferable, no loans allowed) |
| Annual Coupon Rate | ~5.25% p.a. (Interest is fully taxable at slab rates) |
| TDS on Bond Interest | 0% TDS (TDS is exempt under Section 193) |
No. While the capital gain invested in the bond is 100% tax-exempt, the annual interest (approx 5.25% p.a.) is fully taxable under "Income from Other Sources" at your applicable slab rate.
No. If the bonds are pledged, mortgaged, or converted into money before 5 years, the capital gain originally exempted will be revoked and taxed as Long Term Capital Gain in the year of such violation.
Yes. A taxpayer can claim Section 54 exemption for the portion reinvested in a residential house and claim Section 54EC exemption (up to ₹50 Lakhs) for the balance gain in bonds.