{"id":4365,"date":"2013-04-09T17:54:28","date_gmt":"2013-04-09T12:24:28","guid":{"rendered":"http:\/\/www.apnaplan.com\/?p=4365"},"modified":"2015-03-18T10:07:41","modified_gmt":"2015-03-18T04:37:41","slug":"rec-bonds-to-save-long-term-capital-gains-tax-us-54ec","status":"publish","type":"post","link":"https:\/\/www.apnaplan.com\/rec-bonds-to-save-long-term-capital-gains-tax-us-54ec\/","title":{"rendered":"REC Bonds to Save Long Term Capital Gains Tax u\/s 54EC"},"content":{"rendered":"<p style=\"text-align: justify;\">After <a href=\"http:\/\/www.apnaplan.com\/nhai-capital-gains-bonds-to-save-long-term-capital-gains-tax-us-54ec\/\">NHAI<\/a>, REC (Rural Electrification Corporation Ltd) too has \u00a0come up with its fresh issue of Capital Gains Bonds\u00a0<strong>(Series IX)<\/strong>\u00a0of Rs 1,000 crores.<\/p>\n<h3 style=\"text-align: justify;\">REC Capital Gains Bonds \u2013 Significant Points:<\/h3>\n<ul style=\"text-align: justify;\">\n<li><strong>Offer Period:<\/strong>\u00a0April 1, 2013 \u2013 March 31, 2014. So you can invest in these bonds for the entire financial year of 2013-14<\/li>\n<li><strong>Annual Interest Rates:<\/strong>\u00a06% per annum<\/li>\n<li><strong>Deemed Date of Allotment:<\/strong>\u00a0Last day of the month during which the application amount has been cleared and credited to REC\u2019s collection account<\/li>\n<li><strong>Maturity:<\/strong>\u00a03 Years from date of allotment<\/li>\n<li><strong>Price of each bond:<\/strong>\u00a0Rs 10,000<\/li>\n<li><strong>Minimum Investment:<\/strong>\u00a01 Bond (Rs 10,000)<\/li>\n<li><strong>Maximum Investment:<\/strong>\u00a0500 Bonds (Rs 50 Lakhs)<\/li>\n<li><strong><strong>Credit Rating:\u00a0<\/strong><\/strong>\u2018CRISIL AAA Stable\u2019 by CRISIL\/\u201cCARE AAA\u201d by CARE \/\u2018AAA (ind)\u2019 by Fitch Ratings<\/li>\n<li><strong>Loan against Bonds:<\/strong>\u00a0The Bonds are non-transferable, non-negotiable and cannot be Offered as a security for any loan or advance<\/li>\n<li><strong>Trustee:<\/strong>\u00a0IDBI Trusteeship Services Ltd., Mumbai<\/li>\n<\/ul>\n<h3 style=\"text-align: justify;\">REC Capital Gains Bonds &#8211;\u00a0Who can invest?<\/h3>\n<p style=\"text-align: justify;\">Any individual, Hindu Undivided Family (HUF), or non-resident Indians (NRIs) can invest in these REC capital gains bonds. The amount invested should be the long term capital gains made by selling residential property held for more than three years or more.<\/p>\n<h3 style=\"text-align: justify;\">REC Capital Gains Bonds &#8211;\u00a0How much Capital Gains can you Save?<\/h3>\n<p style=\"text-align: justify;\">The long term capital gains on sale of residential property (held for more than 3 years) are taxed at 20% with indexation.\u00a0<strong>You would need to invest the long term capital gains made within 6 months of date of sale of the property.<\/strong><\/p>\n<p style=\"text-align: justify;\"><strong>We explain this by an example:<\/strong><\/p>\n<p style=\"text-align: justify;\">You bought a house in April 2007 for Rs 50 Lakhs and sold it on April 2011 for Rs 1 Crore. This is how the capital gains would be calculated.<\/p>\n<p style=\"text-align: justify;\">The property has been held for more than 3 years and so it qualifies for Long term capital gains.<\/p>\n<p style=\"text-align: justify;\">Next you have to look at<strong>\u00a0Cost of Inflation Index (CII)<\/strong>\u00a0published by Income Tax Department every Financial Year.<\/p>\n<ul style=\"text-align: justify;\">\n<li>The CII for FY 2007-08 when the house was bought is 551<\/li>\n<li>While the CII for FY 2011-12 when the house was sold is 785<\/li>\n<li>So the CII adjusted purchase cost would be Rs 50,00,000 * (785\/551) = Rs 71,23,412<\/li>\n<li>Long Term Capital Gains = Rs 28,76,588 (1,00,00,000 &#8211; 71,23,412)<\/li>\n<li>Tax Liability = 20% of Rs 28,76,588 = Rs 5,75,318<\/li>\n<\/ul>\n<p style=\"text-align: justify;\">So out of Rs 1 crore that you get out of sale, you would need to invest the entire long term capital gains of Rs 28,76,588 in Capital gains Bond by October 2011 (i.e. within six months of date of sale) to save tax of Rs 5,75,318.<\/p>\n<p style=\"text-align: justify;\"><strong>In case you invest only part of the capital gains, the remaining amount would be taxed<\/strong>\u00a0at 20%.<\/p>\n<h3 style=\"text-align: justify;\">Is Capital Gains Bond Interest taxable?<\/h3>\n<p style=\"text-align: justify;\">There is a misconception that the interest earned on capital gains bond is tax free as\u00a0<strong>there is no TDS (Tax Deduction at source) deduction by REC<\/strong>. But unfortunately the truth is\u00a0<strong>the interest earned from capital gains bond is added to your income and taxed at marginal rate of your income tax.<\/strong><\/p>\n<h3 style=\"text-align: justify;\">REC Capital Gains Bonds &#8211;\u00a0How to buy?<\/h3>\n<p style=\"text-align: justify;\">The application form for REC Capital gains bond can be obtained\/ submitted at select branches of \u00a0HDFC Bank, Canara Bank, IDBI Bank, Indusind Bank, ICICI Bank and Axis Bank<\/p>\n<h3 style=\"text-align: justify;\">REC Capital Gains Bonds &#8211;\u00a0Should you invest?<\/h3>\n<p style=\"text-align: justify;\">If you want to save your long term capital gains tax on sale of residential property u\/s 54EC, there are two options:<\/p>\n<ol style=\"text-align: justify;\">\n<li>Reinvest in another residential property within stipulated time frame as per Income tax laws or<\/li>\n<li>Invest in capital tax gains bonds of REC (Rural Electrification Corporation Ltd) or <a href=\"http:\/\/www.apnaplan.com\/nhai-capital-gains-bonds-to-save-long-term-capital-gains-tax-us-54ec\/\">NHAI (National Highways Authority of India)<\/a><\/li>\n<\/ol>\n<p style=\"text-align: justify;\">As far as the investment in capital gains bonds like REC\/NHAI is concerned, the interest offered is just 6% and that too taxable. So at times it might make sense to pay long term capital gain tax and invest the rest of amount in higher return investments.<\/p>\n<h3 style=\"text-align: justify;\">REC or NHAI\u00a0Capital Gains Bonds?<\/h3>\n<p style=\"text-align: justify;\">I have written about NHAI capital gains bond <a href=\"http:\/\/www.apnaplan.com\/nhai-capital-gains-bonds-to-save-long-term-capital-gains-tax-us-54ec\/\">here<\/a>. If you compare both the Capital Gains bond from REC and NHAI, they are same in terms of Risk and Return. The decision\u00a0on which bond to invest should mainly depend on which bond is easier for you to invest or what you want to support &#8211; Building Highways or providing electricity to rural areas :).<\/p>\n<h3 style=\"text-align: justify;\">REC Capital Gains Bonds &#8211; Application Form<\/h3>\n<p style=\"text-align: justify;\">You can get more details and detailed prospectus and application form from\u00a0here.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>After NHAI, REC (Rural Electrification Corporation Ltd) too has \u00a0come up with its fresh issue of Capital Gains Bonds\u00a0(Series IX)\u00a0of Rs 1,000 crores. REC Capital Gains Bonds \u2013 Significant Points: Offer Period:\u00a0April 1, 2013 \u2013 March 31, 2014. So you can invest in these bonds for the entire financial year of 2013-14 Annual Interest Rates:\u00a06% [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":4901,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[31,2322,30,37,63,6],"tags":[2288,2287,2286,832,1100,2283,263,261,2299,2298,2282,2291,2290],"uagb_featured_image_src":{"full":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2013\/04\/REC-Capital-Gain-Bonds-sec-54EC.png",599,316,false],"thumbnail":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2013\/04\/REC-Capital-Gain-Bonds-sec-54EC-150x150.png",150,150,true],"medium":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2013\/04\/REC-Capital-Gain-Bonds-sec-54EC-300x158.png",300,158,true],"medium_large":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2013\/04\/REC-Capital-Gain-Bonds-sec-54EC.png",599,316,false],"large":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2013\/04\/REC-Capital-Gain-Bonds-sec-54EC.png",599,316,false],"1536x1536":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2013\/04\/REC-Capital-Gain-Bonds-sec-54EC.png",599,316,false],"2048x2048":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2013\/04\/REC-Capital-Gain-Bonds-sec-54EC.png",599,316,false],"yarpp-thumbnail":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2013\/04\/REC-Capital-Gain-Bonds-sec-54EC.png",120,63,false]},"uagb_author_info":{"display_name":"Amit","author_link":"https:\/\/www.apnaplan.com\/author\/admin\/"},"uagb_comment_info":4,"uagb_excerpt":"After NHAI, REC (Rural Electrification Corporation Ltd) too has \u00a0come up with its fresh issue of Capital Gains Bonds\u00a0(Series IX)\u00a0of Rs 1,000 crores. REC Capital Gains Bonds \u2013 Significant Points: Offer Period:\u00a0April 1, 2013 \u2013 March 31, 2014. So you can invest in these bonds for the entire financial year of 2013-14 Annual Interest Rates:\u00a06%&hellip;","_links":{"self":[{"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/posts\/4365"}],"collection":[{"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/comments?post=4365"}],"version-history":[{"count":0,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/posts\/4365\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/media\/4901"}],"wp:attachment":[{"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/media?parent=4365"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/categories?post=4365"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/tags?post=4365"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}