Start earning 9-11% fixed returns with bonds that are carefully curated.
Capital Gain Bonds, also known as 54 EC bonds, provide tax exemption on any long-term capital gain if the capital gain arising from such assets is invested in these bonds within 6 months. Apart from allowing individuals to save tax, these bonds enable the government to carry out developmental projects.
Name | Issue Size | Maturity | Coupon |
---|---|---|---|
Power Finance Corporation Ltd. | 2000.00Cr | 21 Feb 2024 | 9.70 % |
Power Finance Corporation Ltd. | 1000.00Cr | 13 Jan 2024 | 9.65 % |
Power Finance Corporation Ltd. | 1078.90Cr | 01 Aug 2026 | 9.46 % |
Power Finance Corporation Ltd. | 2568.00Cr | 01 Sep 2026 | 9.45 % |
Power Finance Corporation Ltd. | 460.00Cr | 27 Aug 2024 | 9.39 % |
Power Finance Corporation Ltd. | 460.00Cr | 27 Aug 2029 | 9.39 % |
Power Finance Corporation Ltd. | 855.00Cr | 19 Aug 2024 | 9.37 % |
Rural Electrification Corporation Limited | 1955.00Cr | 25 Aug 2024 | 9.34 % |
Power Finance Corporation Ltd. | 2000.00Cr | 25 Sep 2024 | 9.25 % |
Rural Electrification Corporation Limited | 100.00Cr | 15 Feb 2027 | 9.15 % |
The following organisations can only issue these bonds:
Tax Exemption -The most crucial factor when investing in capital gain bonds is that the entire invested amount is tax exempted.
Stable Income - You can earn a stable interest income of 5.25% apart from reducing your tax liability.
Accessibility - These PSU bonds are pretty accessible. You can subscribe to the same via online or offline mode. You can store these instruments either in a demat account or physical format.
Low Risk of Default - Since capital gain bonds have the highest credit rating and are owned by the government, they come with a sovereign guarantee. So, the risk of default is low, and your investment is safe and secured.
Let's consider the following details for the example:
Purchase Price: ₹50,000
Redemption Value: ₹60,000
Holding Period: 5 years.
Here's how you can calculate the yield:
Purchase Price (₹) | Redemption Value (₹) | Holding Period (years) | Capital Gain (₹) | Yield (%) |
₹50,000 | ₹60,000 | 5 | ₹10,000 | 20% |
To calculate the capital gain, subtract the purchase price from the redemption value:
Capital Gain = Redemption Value - Purchase Price
= ₹60,000 - ₹50,000 = ₹10,000
To calculate the yield, divide the capital gain by the purchase price, multiply by 100, and express it as a percentage:
Yield (%) = Capital Gain/ Purchase Price * 100
= (₹10,000 / ₹50,000) * 100 = 20%
So, the yield here is 20%.
Please note that this example is for illustrative purposes only, and actual calculations may vary depending on the specific details of the bonds and the prevailing tax regulations.
If you have recently earned capital gains, but don’t want to pay tax on them, capital gain bonds are a good investment option. It also provides a fixed interest income apart from tax exemption. Capital gain bonds are good investment options if you are a risk-averse investor.