Section 54EC - Capital Gains Exemption via NHAI/REC Bonds
LTCG from sale of ANY long-term capital asset is exempt if reinvested in specified bonds (NHAI, REC, PFC, IRFC) within 6 months of transfer. Maximum ₹50 lakh per FY, 5-year lock-in.
Key provisions
- Must invest within 6 months of date of transfer
- Maximum investment: ₹50 lakh in a financial year
- Bonds: NHAI (National Highways Authority of India), REC (Rural Electrification Corp), PFC (Power Finance Corp), IRFC - all rated AAA
- Lock-in: 5 years (if sold or converted before 5 years, exemption withdrawn)
- Available for LTCG from any asset (land, commercial property, gold, unlisted shares, etc.)
- Unlike Section 54, no restriction to residential house reinvestment
FAQs
Currently around 5.25% per annum (NHAI/REC bonds, January 2025 issue). Interest is taxable as income from other sources. The bonds are safe (government-backed) but the interest rate is below bank FD rates. The tax saving on LTCG typically more than compensates.
Use via API
GET/v1/tax-law/sections/by-2025-ref/116
Programmatic access - free, no signup required. ISR-cached for 24 hours.
REQUEST · cURL
curl https://api.thynktax.com/v1/tax-law/sections/by-2025-ref/116
RESPONSE · 200 OK
{
"act_2025_ref": "116",
"old_reference": "Section 54EC, Income Tax Act 1961",
"title": "Section 54EC - Capital Gains Exemption via NHAI/REC Bonds",
"category": "Capital Gains Exemption",
"limit_or_rate": "Up to ₹50,00,000 per FY",
"applicable_to": "All assessees",
"effective_from": "2026-04-01"
}