Section 54EC Bonds Calculator
See how much long-term capital gains tax you save by investing land/building gains in NHAI, REC, PFC or IRFC 54EC bonds — live, with the ₹50 lakh cap applied.
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Exemption & tax breakdown
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Disclaimer: Indicative estimate for individual residents. LTCG on land/building is taxed at 12.5% without indexation post-Budget 2024. Surcharge, cess and other income are not included. Verify with a professional before investing.
Section 54EC at a glance
Section 54EC lets you defer — and effectively save — long-term capital gains tax on the sale of land or building (or both) by reinvesting the gain in specified capital-gains bonds. The exemption equals the amount invested, but is capped at ₹50 lakh in a financial year.
Eligible 54EC bond issuers
Only bonds notified by the government qualify. All four issuers offer near-identical terms — a 5-year lock-in and interest paid annually (currently around 5.25%, fully taxable as "income from other sources").
Worked example
Suppose you sell a plot and earn a long-term capital gain of ₹40 lakh, then invest the full ₹40 lakh in REC 54EC bonds within 6 months. Since ₹40 lakh is below the ₹50 lakh cap, the entire gain is exempt.
Key terms explained
₹50 lakh cap
The exemption is limited to ₹50,00,000 of investment in a financial year (and across the year of transfer and the next, combined). Gains above ₹50 lakh remain taxable at 12.5%.
6-month window
You must invest within 6 months of the date of transfer of the asset. Miss the window and the exemption is lost — even if you invest later.
5-year lock-in
Bonds are locked for 5 years. If you transfer, convert or take a loan against them earlier, the exemption is withdrawn and taxed in that year.
Taxable interest
Interest of about 5.25% is paid annually and is fully taxable at your slab rate. Only the principal enjoys the capital-gains exemption, not the interest.
Questions people ask
Short answers on Section 54EC Bonds Calculator. Tap a question to open it.
01What are 54EC bonds?
Bonds issued by NHAI, REC, PFC and IRFC in which long-term capital gain from the sale of land or building can be invested to claim exemption under section 54EC. They carry a fixed coupon and a five-year lock-in.
02What is the investment limit and time frame?
Up to ₹50 lakh in a financial year, and across the year of transfer and the following year taken together. The investment must be made within six months of the date of transfer.
03Which gains qualify?
Only long-term capital gain arising from the transfer of land or building or both. Gains on shares, mutual funds, gold or other assets do not qualify for section 54EC.
04Is the interest on these bonds tax free?
No. The interest is fully taxable at your slab rate. Only the capital gain invested is exempt, and no TDS is deducted on the interest.
05What if I redeem or pledge the bonds early?
The exemption is withdrawn and the gain is taxed in the year the bonds are transferred or converted into money. Taking a loan against them is treated as a transfer for this purpose.
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Disclaimer: This tool gives indicative results for general guidance only and is not professional advice. Please verify with a qualified CA before acting on the numbers.