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Why You Should Invest in Capital Gain Bonds 

by Kashif Khan
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Why You Should Invest in Capital Gain Bonds 

A taxpayer can save on long-term capital gains tax by investing in bonds issued by infrastructure companies like NHAI and REC. These bonds are backed by the government and come with virtually zero risk. 

Investment Options 

Investors can invest in these bonds through a bank branch or online, in either demat or physical form. These bonds are AAA-rated, indicating their stability and security. 

Ease of Access 

To purchase NHAI or REC bonds, an investor should fill up the application form and submit it at a bank branch. He must also attach a demand draft or payee cheque, which should be in the name of NHAI or REC. 

These capital gain bonds have a lock-in period of five years and can be redeemed only after that. It was earlier for three years but it was extended to five years in Budget 2019. 

Benefits of Capital Gain Bonds 

The main advantage of investing in these bonds is that they offer a capital gains tax exemption under Section 54EC of the Income Tax Act. This can help save an individual from paying a 20% long-term capital gains tax on any property sale. 

Moreover, they offer an annual interest rate of 5% which is lower than other investments such as fixed deposits and equity shares. 

Besides, these bonds have a lock-in period of 5 years which makes them an ideal investment option for investors who are looking for a safe investment with high returns. The bonds are also regulated by the Securities and Exchange Board of India (SEBI).

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