Plan your investment
What Our Plans Cover
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Investment of long-term capital ga...
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Bonds from designated Section 54EC...
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Annual interest payment at the sta...
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Return of principal at the end of...
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Investment up to ₹50 lakh in a fin...
Who Can Consider This Plan?
- Indian resident individual, HUF, trust, firm or company
- NRIs, through NRE, NRO or FCNR deposits
- Minors, through a guardian
- PAN, required to avoid a higher rate of tax deduction at source
- Completed KYC with the institution
What May Not Be Covered?
- Gains from assets other than land or building
- Investment beyond ₹50 lakh in a financial year
- Investment after the six-month window from the sale
- Premature redemption, transfer or pledging of the bonds
- Tax exemption on the interest, which is fully taxable
Always check the policy wording before you commit.
Why Choose Wealth & Covers?
- Expert advice to choose the right plan
- Plans from leading investments companies
- Hassle-free process and documentation
- End-to-end support, including claim assistance
- Dedicated relationship manager
- Expert Guidance Personalised advice from experienced investments professionals.
- End-to-End Support From choosing the right plan to claim assistance, we are with you always.
- Claims Assistance Hassle-free claim support to ensure you get what you deserve.
- Transparent Process Clear information, easy documentation and a hassle-free experience.
Overview
Capital gain bonds issued under Section 54EC allow an investor to defer tax on long-term capital gains from the sale of land or building by investing the gain in specified bonds within six months of the sale.
The bonds are issued by designated infrastructure institutions, carry a five-year lock-in, and pay a modest fixed rate of interest which is itself fully taxable. The investment limit is fifty lakh rupees in a financial year.
The arithmetic is straightforward. You are exchanging an immediate tax outgo for five years in a low-return instrument. Where the tax saved exceeds what you could reasonably have earned on the after-tax amount elsewhere, the bonds win. Where it does not, paying the tax and investing freely is the better answer — and that calculation is worth doing rather than assuming.
Who should consider it
Sellers of land or buildings with a long-term capital gain and no intention to buy another property. Sellers who want to defer the tax without committing to a fresh property purchase.
Sellers who intend to buy another residential property should look at Section 54 instead, which may offer a fuller exemption.
Benefits
- Defers tax on long-term capital gains from land or building
- Issued by designated institutions with a government-backed profile
- A defined five-year tenure with a known outcome
- No market risk on the principal
- Simple to execute within the six-month window
- An alternative to committing to another property purchase
What is included, and what is not
Read the right-hand column first. It is the one that tends to surprise people later.
Included
- Investment of long-term capital gains from land or building
- Bonds from designated Section 54EC issuers
- Annual interest payment at the stated rate
- Return of principal at the end of five years
- Investment up to ₹50 lakh in a financial year
Not included
- Gains from assets other than land or building
- Investment beyond ₹50 lakh in a financial year
- Investment after the six-month window from the sale
- Premature redemption, transfer or pledging of the bonds
- Tax exemption on the interest, which is fully taxable
Terms vary between providers and between plans from the same provider. The offer document you receive is what governs — we will walk you through it before you commit.
How it works with us
- 1 We work out what the deposit is actually for An emergency fund, a dated obligation, or long-term savings. Only the first two are really jobs for a deposit.
- 2 Rates compared across banks, small finance banks and corporates The spread is wider than most savers realise, and so is the difference in safety. We show both sides.
- 3 Tenure and payout structured around your tax position Cumulative or non-cumulative changes when the tax falls due. For some savers that matters more than the rate.
- 4 Opened, with nomination and Form 15G/H handled The two administrative steps savers skip and later regret. We complete both at opening.
- 5 Maturity tracked, and reinvestment decided deliberately Auto-renewal at whatever rate happens to prevail is a decision by default. We flag maturities so it is a decision by choice.
Important considerations
The things a brochure tends to leave out. Read these before you decide.
- The six-month window is strict and runs from the date of transfer. Missing it removes the option entirely, and there is no extension.
- Do the arithmetic before assuming these bonds are the right answer. Compare the tax saved against what the after-tax amount could earn over five years invested freely.
- The interest is fully taxable and the rate is modest. The benefit is the deferral, not the return.
- If you intend to buy another residential property, Section 54 may give a fuller exemption. Look at both before committing.
- The lock-in is absolute — no premature redemption, transfer or pledge. Five years means five years.
Documents required
- PAN card
- Identity proof — Aadhaar, passport or voter ID
- Address proof
- Recent passport-size photograph
- Existing bank account details, where opening with your own bank
- Form 15G or 15H, where applicable, to avoid tax deduction at source
- Nomination form
Frequently Asked Questions
Which gains qualify?
Long-term capital gains from the sale of land or a building. Gains from other assets — shares, mutual funds, gold — do not qualify for Section 54EC, and this is a common misunderstanding worth checking before you plan around it.
How long do I have to invest?
Six months from the date of transfer. The window is strict, there is no extension, and missing it removes the option entirely. Where a sale completes near a financial year end, the timing needs planning carefully.
Is it always worth investing rather than paying the tax?
Not automatically. You are locking money for five years at a modest, fully taxable return. Compare the tax you would save against what the after-tax amount could reasonably earn invested freely over the same period. Sometimes paying the tax and investing is the better outcome.
Can I invest more than fifty lakh?
No. The limit is fifty lakh rupees in a financial year, and it applies across the six-month window even if that spans two financial years. Gains above that have to be dealt with another way.
What if I want to buy another house instead?
Section 54 provides an exemption where the gain is reinvested in another residential property, and it may be fuller than the 54EC deferral. If a purchase is genuinely intended, look at both before committing to the bonds.
Want a shortlist instead of a catalogue?
Tell us the situation and an advisor comes back with two or three options that actually fit — and names what each one gives up.