Interest on capital gains bonds slashed to 5%

EXISTING BONDS WILL CONTINUE TO EARN 5.75% INTEREST

MUMBAI: Investors looking to save long-term capital gains through so-called EC54 bonds sold by public sector entities such as National Highways Authority of India, REC Ltd and Indian Railway Finance Corp. Ltd beginning 1 August will earn 5% interest, against 5.75% earlier.

The sharp rate cut comes in the wake of falling interest rates. Existing bonds, though, will continue to earn 5.75%.

Investment up to ₹50 lakh in these bonds offers a deduction from capital gains tax under Section 54 EC of the Income Tax Act.

Such investment must be made within six months of the transfer of the capital asset.

The government has, however, extended the six-month due date falling between 20 March, 2020, to 29 September, till 30 September.