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Home Income Tax Capital Gain All about REC 54EC Capital Gain Tax Exemption Bonds 2020-21

All about REC 54EC Capital Gain Tax Exemption Bonds 2020-21

Have you earned capital gain during the financial year 2020-21? Apply for REC 54EC Capital gain tax exemption bonds 2020-21 is one of the great options available to the taxpayer for getting exemption from capital gain u/s 54EC.

All about REC 54EC Capital Gain Tax Exemption bonds 2020-21

Do you know:

Q1. Who can claim exemption under section 54EC?

Ans. Any Person

Q2. Whether Short Term Capital Asset or Long-Term Capital Asset is eligible for Exemption?

Ans. Long-Term Capital Asset.

Q3. Which specific asset is eligible for exemption?

Ans. Any Long-Term capital asset (being land or building or both)

Q4. Which asset should the taxpayer acquire to avail the benefits of section 54EC?

Ans. Following are the Tax Exemptions bonds available under section 54EC, the taxpayer can acquire any of them or any combination of them to avail the benefits of section 54EC.

  • National Highways Authority of India
  • Rural Electrification Corporation
  • Power Finance Corporation Limited (as notified)
  • Indian Railway Finance Corporation Limited (as notified)

Q5. What is the time limit for acquiring such new asset under section 54EC?

Ans. Within 6 months from the date of transfer of Long-Term capital asset but in case of compulsory acquisition from the date of receipt of compensation.

Q6. What is the quantum of Exemption u/s 54EC?

Ans. The amount of investment made in the new asset or capital gain, whichever is lower.

Q7. Can exemption claimed u/s 54EC be revoke in a subsequent year?

Ans. Yes, if the new asset is transferred or it is converted into money or a loan is taken on security of the new asset within 5 years of its acquisition.

Q8. What would be consequences if the exemption is revoked?

Ans. It is going to be taxable in the year in which the default is committed considering it as a long-term capital gain.

Before we proceed to how to apply for REC 54EC capital gain tax exemption bonds 2020-21, there has been an update for those applicants who have applied for such tax exemption bonds on or after 15.03.2020.

Due to COVID-19, there may be a delay in allotment of 54EC Capital Gain Tax Exemption (CGTE) Bonds.

notice 54ec rec

REC Capital Gains Tax Exemption Bonds-Series-XIV highlights

  • Issuing Company: REC Limited (formerly Rural Electrification Corporation Limited), incorporated on July 25, 1969, under the Companies Act, 1956
  • Issue of Non-Convertible, Non-Cumulative, Secured, Rated, Unlisted, Redeemable, Taxable Bonds in the nature of Debenture of ₹ 10,000/- each for cash at par with Benefits U/S 54EC of the Income Tax Act, 1961, on Private Placement-Series XIV – On Tap Basis.
  • For Financial Year 2020-21: REC will issue REC Capital Gains Tax Exemption Bonds-Series-XIV
  • Credit rating for such Series-XIV are:

– ‘ICRA AAA’ by ICRA Limited.

– ‘CARE AAA’ Stable/ CARE A1+ by Care Rating Limited.

– ‘CRISIL AAA/Stable’ by CRISIL Limited.

  • Issue size for Series-XIV: Rs. 2,500 Crore plus greenshoe option to retain the oversubscription
  • Face value for each bond is Rs.10,000/- per bond.
  • Issue price for each bond would be Rs.10,000/- per bond.
  • Coupon rate for such bond is 5.75% annually.
  • The issue starts on 1st April 2020 and the applicant can make an application for 54EC capital gains tax exemption bonds series XIV till 31st March 2021 at the close of the banking hours or at a date as may be prescribed by the REC as per its discretion.
  • The applicant has to make an application for a minimum lot of 2 bonds of Rs.10,000/- each i.e. Minimum of Rs.20,000/-.
  • The applicant can apply for a maximum of 500 bonds of Rs.10,000/- each in a financial year, subject to the provisions of section 54EC of the Income Tax Act, 1961, as amended.
  • Mode of subscription is private placement.
  • Registered bondholder: Bondholder whose name appears in the register of Bondholders maintained by the Corporation or its Registrar (in case of investors opting for physical certificates) and beneficial owners (in case of investors opting for Demat option)
  • Payment mode can be Cheque or draft which has to be drawn in the name of: “REC Limited -54 EC Bonds” or ‘Rural Electrification Corporation Limited – 54EC Bonds’
  • Date of allotment of the said bonds would be the last day of each month in which the subscription money is received by the REC and credited to REC 54EC collection account.
  • Interest payment for the said bonds will be on an annual basis i.e. on June 30th of each year.
  • The tenor for REC 54EC bonds would be for 5 years/60 months from the deemed date of allotment.
  • Redemption of such bonds will be at par, at the end of 5th Year or 60th Month from the deemed date of allotment, since this is a non-cumulative bond.
  • These bonds are non-transferable, non-negotiable and they cannot be offered as a security for any loan or advance.
  • The trustee for these series is SBICAP Trustee Company Limited, Mumbai.

Note:

(a) REC reserves the right to revise the coupon rate and/or extend and/or close the issue by giving notice on its website. The investors are advised to consult REC/Mobilisers, before depositing the application with the bank.

(b) All applications submitted but rejected by REC would be returned by REC to the applicant/ collection banker, without any Interest

(c) Application for minimum ₹ 20,000/- (in multiples of Rs 10,000/- thereafter) will be accepted, any amount received in fraction will be refunded to the investor without interest.

Some important Links

NHAI 54EC Capital Gain Tax Exemption Bonds for FY 2020-21. Click here.

Power Finance Corporation Corporation Capital Gain Tax Exemption Bonds –Series IV for FY 2020-21. Click here.

IRFC Capital Gain Tax Exemption Bonds –Series IV For FY 2020-21

For online Application of REC bonds.

For Offline Application download form.

Form 60

Format for Bank Certificate for Confirmation of Bank Details with Signature Attestation

Check Status of REC 54EC Bond Application

NECS/ECS/NEFT/DIRECT CREDIT MANDATE FORM

REQUEST FORM FOR UPDATION OF E-MAIL ADDRESS

Procedure of change of bank details

Procedure of duplicate bond certificate

Procedure of change address

Procedure of nomination

Procedure of change of nominee

Procedure of transmission and name deletion

Procedure of transmission in the name of successor

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5 COMMENTS

  1. I am an nri(UK) and OCI card holder too. I want to invest in say Nhai bonds. The form asks for a self certified copy of Aadhar card. I don’t have it as I am not a resident. Is this essential? I have a PAN card of course. I would invest from a NRO account. I could download the application form, fill it in and send it with the cheque to my brother in law in Mumbai to submit in one of the accepting banks. I would put down my UK address in the form. I would attach self certified copy of my PAN card and of my UK driving license, as an address proof. Do I also need to Include a copy of my OCI card and UK passport?
    The sale of the property ( through A Special POA) is taking place in January and 20% TDS is being cut.
    I am basically asking you for advice as to whether I can apply for the Bonds from here ( Without coming to India in this corona time)
    I will be very much obliged. Thanks and Regards.

    • Dear Ram,
      Kindly note Aadhar card is not mandatory, for NRI investor kindly submit the following documents:-

      1) Application form, complete in all respects.

      2) Pan card self-attested copy.

      3) Transaction should be done from NRO account and bank details provided for repayment (for annual interest and maturity payment ) should be NRO account.

      4) The overseas address certificate will be retained at our end as Airmail service from Indian post is still suspended. In case an investor wants the bond certificate in any Indian address then he has to give an authorization letter.

      Thanks

  2. Thank you very much Deveshji for prompt reply to my query and I think it will help lots of NRIs who are looking to invest in these cgt exemption under section 54EC bonds — especially in these covid affected times, when they can’t travel to India to carry out any transactions.

    Would you be able to explain your point 4) a bit further please. Should I send the completed application form along with the documents and the cheque etc, to your office OR to my brother in law in Mumbai to submit it in one of accepting bank branches. AND I should include an authorisation letter , so that the bond certificate could be posted to an authorised address in India? – as the Indian Airmail service is still suspended.

    My sincere thanks and regards, —- Ram Bapat

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