NHAI, REC cut interest rate on capital gains bonds
In sync with the declining rates in the economy, National Highways Authority of India (NHAI) and REC Ltd have cut the interest rate on their capital gains bonds from 5.75% to 5% from 1 August. The lower rate will only apply to fresh bonds where payment by the concerned institution has been received after 1 August. The reduction will not apply on existing bonds.
Investment in NHAI and REC up to ₹50 lakh offers a deduction from capital gains tax under Section 54 EC of the Income Tax Act. Such investment has to be made within six months of the transfer of the capital asset.
“For any due date falling from 20 March to 29 September, the finance ministry has extended it to 30th September on account of the Covid 19 pandemic,” said Prakash Hegde, a Bengaluru-based chartered accountant. For example, if you sold your house on 15 December and had your 6 month due date in mid-June, this would get extended to 30 September. The interest on the bonds is taxable at your slab rate. The bonds have a lock-in period of 5 years.