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NameIssue SizeMaturityCoupon
Power Finance Corporation Ltd.CRISIL AAAINE134E08FX72000.00Cr21 Feb 20249.70 %
Power Finance Corporation Ltd.CRISIL AAAINE134E08FW91000.00Cr13 Jan 20249.65 %
Power Finance Corporation Ltd.CRISIL AAAINE134E08DS21078.90Cr01 Aug 20269.46 %
Power Finance Corporation Ltd.CRISIL AAAINE134E08DU82568.00Cr01 Sep 20269.45 %
Power Finance Corporation Ltd.CRISIL AAAINE134E08GG0460.00Cr27 Aug 20249.39 %
Power Finance Corporation Ltd.CRISIL AAAINE134E08GH8460.00Cr27 Aug 20299.39 %
Power Finance Corporation Ltd.CRISIL AAAINE134E08GD7855.00Cr19 Aug 20249.37 %
Rural Electrification Corporation LimitedCRISIL AAAINE020B07IZ51955.00Cr25 Aug 20249.34 %
Power Finance Corporation Ltd.CRISIL AAAINE134E08EH3736.00Cr15 Apr 20239.26 %
Power Finance Corporation Ltd.CRISIL AAAINE134E08JY72000.00Cr25 Sep 20249.25 %

Who issues these bonds?

The following organisations can only issue these bonds:

  1. National Highway Authority of India (NHAI)
  2. Rural Electrification Corporation (REC.)
  3. Indian Railways Finance Corporation Limited (IRFC)
  4. Power Finance Corporation (PFC)

How do Capital Gain Bonds work?

  • Determine Your Eligibility: Only individuals and HUFs can invest in 54EC Bonds.
  • Investment Timeframe: To avail of deduction under 54EC of the I-T Act, you have to invest in 54EC Bonds within six months from the asset's sale date, which generated the capital gains.
  • Check bond availability: First, you have to choose the most suitable bond for your investment. Then check their availability through the issuer’s website or your financial advisor.
  • Determine Investment Amount: The minimum investment for an individual or HUFamount is ₹ 10,000, while the maximum is ₹50 lakhs in a financial year.
  • Application process: Fill out the application form provided by the issuer and provide the required documents (like PAN card and address proof) along with a cancelled cheque or bank statement. You can pay through a demand draft or an account payee cheque if you are investing through a physical form. If you are doing it through a demat form, pay via NEFT/RTGS  through your broker or depository participant and mention the UTR number in the form.
  • Investment Confirmation: Once your investment is accepted, you will receive a confirmation from the issuer stating the bond certificate number, investment amount, and investment date. Keep the bond certificate safe since you will have to produce it at maturity.

What are the features of Capital Gain Bonds?

  • The minimum investment is ₹10,000, while the maximum you can invest in 54EC bonds is ₹ 50 lakh in a financial year.
  • To avail of the capital gain exemption, you must hold the bond for 5 years from the date of acquisition (if the bond is issued on or after 1st April 2018). If you redeem the bond before 5 years, the entire amount will be taxable under long-term capital gain.
  • You will only get a deduction for the amount invested in 54EC bonds. Suppose you earn 40 lakh from selling a capital asset and invest 35 lakh in the 54EC bond. So, only 35 lakh will be exempted under section 54EC of the I-T Act. The remaining 5 lakhs will be taxable under ‘Long term capital gain’.
  • You cannot claim a deduction under section 80C of the I-T Act for the investment made capital gain bonds.
  • Since capital gain bonds have the highest credit rating and are backed by the government, they are considered relatively safe investments.
  • Investing in capital gain bonds lets you reduce your capital gains tax liability and provides a fixed interest rate.

Advantages of Capital Gain 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.

Disadvantages of Capital Gain Bonds?

  • Capital gain bonds are non-liquid as they cannot be redeemed before 5 years.
  • Capital gain bonds provide much lower returns than equity, mutual funds, and other debt options. Moreover, the interest earned on capital gains is taxable.
  • Capital gain bonds are non-transferable.

How to calculate the yield of Capital Gain Bonds?

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 (%)







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.

Who should invest in these Bonds?

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.

FAQs about Capital Gain Bonds

Can I invest in multiple bonds to claim the tax benefit?

Yes, you can invest in multiple bonds, provided the bonds are mentioned under 54EC of the Income Tax Act, 1961. Remember that the total investment should not exceed the threshold of 50 lakhs. If it does, you will only get tax exemption up to ₹ 50 lakhs.

Can I redeem the investment in bonds before its maturity?

Yes, you can redeem your investment anytime, but if you redeem it before the lock-in period's end, you cannot claim any tax exemption.

What happens to the capital bonds when the bondholder dies?

If the bondholder dies, the issuing entity will transfer those bonds to the legal heir.

Can NRIs invest in 54EC bonds?

Yes, NRIs (Non-Resident Indians) can invest in 54EC bonds. However, they will not be eligible for the exemption offered in section 54EC.
Disclaimer: The facts and information on this page are for information and awareness purposes only. No information provided here is intended towards any specific user and should not be construed as investment advice or a recommendation of any kind whatsoever. You are requested to consult with your professional investment advisor or tax advisor for specific directions on any investments in any securities including the bonds mentioned on this page before making any investment decision. Wint Wealth shall not be liable for any losses incurred by you based on an investment decision utilising the information on this page.