How investing in 54EC bonds can help you save tax on long-term gains (2024)

FAQs

Which bonds are best to save capital gain tax? ›

54EC bonds are specifically meant for investors earning long-term capital gains and would like tax exemption on these gains. Tax deduction is available under section 54EC of the Income Tax Act.

Are 54ec bonds tax-free? You can receive tax exemption under IT section 54EC by investing in these bonds. However, the interest earned is taxable as per the income tax slab. You will need to declare capital gain from 54EC bonds under your return filing since no tax is deducted at the source.

Treasury bonds and Series I bonds (savings bonds) are also tax-efficient because they're exempt from state and local income taxes. But corporate bonds don't have any tax-free provisions, and, as such, are better off in tax-advantaged accounts.

Tax saving bonds enjoy special privileges under Section 80CCF of the Income Tax Act which states that individuals enjoy tax deductions up to Rs 20,000 on the bonds owned by them.