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PFC 54EC Capital Gain Tax Exemption Bonds; 54EC bonds

Invest in PFC Capital Tax Gain Bonds under Section 54EC to save long-term capital gains tax. Learn more about features, benefits, and eligibility. Frequently Asked Questions – PFC’s 54EC Capital Gain Tax Exemption Bonds 1. Who can apply (Eligibility to invest) in PFC’s 54EC Capital Gain Bonds? Following are eligible for issuance of PFC’s Capital Gain Bonds i. Individuals ii. Hindu Undivided Families (HUF) iii. Partnership firm iv. Insurance Companies v. Companies and Body Corporates vi. Provident Funds, Superannuation Funds and Gratuity Funds vii. Banks viii. Mutual Funds ix. Financial Institutions (FIs) x. Foreign Portfolio Investors (Subject to existing regulations) xi. Regional Rural Banks xii. NRIs/other foreign eligible investor investing out of NRO A/c on non‐repatriable basis xiii. Co‐operative Banks xiv. Limited Liability Partnership The above entities are eligible to apply for PFC 54EC Capital Gain Tax Exemption Bonds; 54EC bonds 2. How much amount can I invest in PFC’s 54EC Bonds ? You may invest in PFC’s 54EC Bonds in multiple of Rs 10,000/- each, subject to the following ceilings : Minimum : 2 54EC Bonds of Rs 10,000/- each (i.e. Rs 20,000) Maximum : 500 54EC Bonds of Rs 10,000/- each (i.e. Rs 50 Lakh) 3. What is the Interest Rate on PFC’s 54EC bonds? Currently, the interest rate being offered on PFC’s 54ec Capital Gain Bonds is 5.25% p.a. payable annually. 4. What is the tenure of PFC’s 54EC Bond? Currently, PFC’s 54EC Bonds have maturity period of 5 years. 5. Can I transfer or sell PFC’s 54EC Bonds? Are these bonds listed on the stock exchange? No. 54EC Bonds are Non‐transferable, Non‐Marketable, Non‐negotiable and cannot be offered as security for any loan or advance. Due to non-transferability, the 54EC Capital Gain bonds have not been listed on any stock exchange for purchase/sale. 2 | P a g e However, transmission of the 54EC Bonds to the legal heirs in case of death of the Bondholder/Beneficiary to the Bonds is allowed. 6. Whether I can get PFC’s 54EC Bonds in its DEMAT Account. Yes, you can opt for PFC’s 54EC Bonds for credit in Demat account or have the physical bond certificate. 7. To enable to understand the risk, please tell what is the credit rating and security of PFC’s 54EC Bonds? PFC’s 54EC Bonds are AAA rated by domestic credit rating agency(ies) (AAA/Stable’ by CRISIL, ‘AAA (Stable)’ by ICRA, & 'AAA/Stable' by CARE) and are secured by a charge on the total receivables of the Company and/ or identified movable property by a first/pari pasu charge as may be agreed between the Company and the debenture trustee, pursuant to the terms of the Debenture Trust Deed excluding the Receivables on which specific charge has already been created by the Company. 8. Can the bonds be owned jointly? Individuals / NRI can apply in joint names and maximum three individuals can apply through a Joint Application as first, second and third applicant. In case of application with Demat option, the sequence of joint applicants name must be same as mentioned in the Demat Account. 9. Can I avail nomination facility on PFC’s 54EC Bonds? Yes, nomination facility is available on PFC’s 54EC Bonds. The sole Individual/NRI bondholder [or where the Bonds are held by more than one person, first bondholder along with other joint Bondholders being individual(s)] may nominate any one person (being an individual) who shall be entitled to bonds in the event of death of sole holder or all the joint holders, as the case may be. When the bonds are held by two or more persons, the nominee shall become entitled to receive the amount (on maturity) only on the demise of all the bondholders in succession. However, in case bonds are in Demat form, demographic and nominee details will be picked up from DP ID/CLIENT ID and the details of the nominee, if any, as mentioned in the application form will be invalid. 13. When will I get the interest on PFC’s 54EC Bonds? Please refer the indicative timelines as described in query 11 above. Interest on allotted bonds will be paid every year on 31st July (falling after deemed date of allotment) till redemption of the said bonds and balance along with redemption/maturity amount of 54EC Bonds. Redemption/Maturity date would be 5 years (presently) from the deemed date of allotment of 54EC Bonds. First Interest in respect of the allotments made up to May 31st of a year will be made on July 31st of the same year. First Interest on subsequent allotment would be made on July 31st of following year. Record date I s15 days prior to interest payment date. 14. How is the interest earned on these bonds taxed for me? 8 | P a g e There is no deduction of tax at source on the interest payable to the Resident Indian investors on PFC’s 54EC Bonds. However, such investor may be required to pay tax on the interest income as advance tax as per applicable law. 15. I have PFC’s 54EC Capital Gain Bonds in physical mode. Do I need to surrender the Physical Bond Certificate on its maturity/redemption after 5 years? You are not required to surrender the physical Bond Certificate of PFC’s 54EC Bonds on its redemption/maturity. The bonds will be automatically redeemed by PFC on maturity (i. e. on the expiry of 5 years from the deemed date of allotment) and the redemption proceeds would be paid to the registered bondholders. 16. How should I intimate any change in the Bank account details / address/ nomination detail/etc.? All the Forms for modification request in the bank account detail/address/nomination/etc. are available at https://pfcindia.com/ensite/Home/VS/10246 The link also takes care of requirement for transmission, indemnity form in case of request for issuance of duplicate bond certificate. ***** Disclaimer : Various features given in above FAQs in respect of PFC’s 54EC Capital Gain Bonds have been explained in the Information Memorandum, which are available on websites of PFC as well as Registrar to the Issue. Investors are advised to read the same alongwith related documents carefully before making any investment in PFC’s 54EC Capital Gain Bonds. In case of any discrepancy between above FAQs and Information Memorandum, the paragraph stated in the Information Memorandum will prevail.

PFC 54EC Capital Gain Tax Exemption Bonds; 54EC bonds Frequently Asked Questions – 54EC Capital Gain Tax Exemption Bonds 1. What are long term specified assets specified for benefits u/s 54EC of the Income Tax Act 1961? The long term specified assets under section 54EC of the Income Tax Act are any bonds redeemable after 5* (Five) years issued by notified companies (presently 4), which also includes Power Finance Corporation Ltd (PFC), a Government of India Enterprise under the administrative control of Ministry of Power and is classified as an Infrastructure Finance Company (NBFC-IFC) by the Reserve Bank of India. * The period was 3 (three) years for bonds issued by the then eligible companies between 01.04.2007 to 31.03.2018 2. Is there a ceiling on the amount of exemption to be claimed under section 54EC of the Act? Yes. There is a ceiling of Rs. 50 lakhs in a financial year on the investment in 54EC Bonds. 3. What is the time limit within which one has to make investment in 54EC Bonds? One has to invest in the 54EC Bonds within a period of 6 months from the date of sale of original asset. 4. Is the benefit available against Short Term Capital Gains? No. This benefit can only be claimed against long term capital gains. 5. Whether 54EC Bonds can be redeemed before the maturity period of five years? No. These bonds can not be redeemed before the specified maturity period. 6. Can a person invest more than Rs. 50 lakh in 54EC bonds? No. There is a limit of Rs 50 lakh for investment in the 54EC Bonds for availing benefit under Section 54EC of the Act. ***** Disclaimer : PFC does not provide tax, investment, legal, or accounting advice. The above material has been prepared for informational purposes only and is based on our understanding. The above is not intended to provide, and should not be relied on for tax, investment, legal or accounting etc. advice. PFC does not assume any responsibility/liability for any rejection of tax benefit, penalty, loss or any other kind of adverse outcome in any way for actions taken based on the above material. One should consult own tax, investment, legal and accounting etc. advisors before engaging in any transaction.

PFC 54EC Capital Gain Tax Exemption Bonds; 54EC bonds

Invest in PFC Capital Tax Gain Bonds under Section 54EC to save long-term capital gains tax. Learn more about features, benefits, and eligibility. Frequently Asked Questions – PFC’s 54EC Capital Gain Tax Exemption Bonds 1. Who can apply (Eligibility to invest) in PFC’s 54EC Capital Gain Bonds? Following are eligible for issuance of PFC’s Capital Gain Bonds i. Individuals ii. Hindu Undivided Families (HUF) iii. Partnership firm iv. Insurance Companies v. Companies and Body Corporates vi. Provident Funds, Superannuation Funds and Gratuity Funds vii. Banks viii. Mutual Funds ix. Financial Institutions (FIs) x. Foreign Portfolio Investors (Subject to existing regulations) xi. Regional Rural Banks xii. NRIs/other foreign eligible investor investing out of NRO A/c on non‐repatriable basis xiii. Co‐operative Banks xiv. Limited Liability Partnership The above entities are eligible to apply for PFC 54EC Capital Gain Tax Exemption Bonds; 54EC bonds 2. How much amount can I invest in PFC’s 54EC Bonds ? You may invest in PFC’s 54EC Bonds in multiple of Rs 10,000/- each, subject to the following ceilings : Minimum : 2 54EC Bonds of Rs 10,000/- each (i.e. Rs 20,000) Maximum : 500 54EC Bonds of Rs 10,000/- each (i.e. Rs 50 Lakh) 3. What is the Interest Rate on PFC’s 54EC bonds? Currently, the interest rate being offered on PFC’s 54ec Capital Gain Bonds is 5.25% p.a. payable annually. 4. What is the tenure of PFC’s 54EC Bond? Currently, PFC’s 54EC Bonds have maturity period of 5 years. 5. Can I transfer or sell PFC’s 54EC Bonds? Are these bonds listed on the stock exchange? No. 54EC Bonds are Non‐transferable, Non‐Marketable, Non‐negotiable and cannot be offered as security for any loan or advance. Due to non-transferability, the 54EC Capital Gain bonds have not been listed on any stock exchange for purchase/sale. 2 | P a g e However, transmission of the 54EC Bonds to the legal heirs in case of death of the Bondholder/Beneficiary to the Bonds is allowed. 6. Whether I can get PFC’s 54EC Bonds in its DEMAT Account. Yes, you can opt for PFC’s 54EC Bonds for credit in Demat account or have the physical bond certificate. 7. To enable to understand the risk, please tell what is the credit rating and security of PFC’s 54EC Bonds? PFC’s 54EC Bonds are AAA rated by domestic credit rating agency(ies) (AAA/Stable’ by CRISIL, ‘AAA (Stable)’ by ICRA, & 'AAA/Stable' by CARE) and are secured by a charge on the total receivables of the Company and/ or identified movable property by a first/pari pasu charge as may be agreed between the Company and the debenture trustee, pursuant to the terms of the Debenture Trust Deed excluding the Receivables on which specific charge has already been created by the Company. 8. Can the bonds be owned jointly? Individuals / NRI can apply in joint names and maximum three individuals can apply through a Joint Application as first, second and third applicant. In case of application with Demat option, the sequence of joint applicants name must be same as mentioned in the Demat Account. 9. Can I avail nomination facility on PFC’s 54EC Bonds? Yes, nomination facility is available on PFC’s 54EC Bonds. The sole Individual/NRI bondholder [or where the Bonds are held by more than one person, first bondholder along with other joint Bondholders being individual(s)] may nominate any one person (being an individual) who shall be entitled to bonds in the event of death of sole holder or all the joint holders, as the case may be. When the bonds are held by two or more persons, the nominee shall become entitled to receive the amount (on maturity) only on the demise of all the bondholders in succession. However, in case bonds are in Demat form, demographic and nominee details will be picked up from DP ID/CLIENT ID and the details of the nominee, if any, as mentioned in the application form will be invalid. 13. When will I get the interest on PFC’s 54EC Bonds? Please refer the indicative timelines as described in query 11 above. Interest on allotted bonds will be paid every year on 31st July (falling after deemed date of allotment) till redemption of the said bonds and balance along with redemption/maturity amount of 54EC Bonds. Redemption/Maturity date would be 5 years (presently) from the deemed date of allotment of 54EC Bonds. First Interest in respect of the allotments made up to May 31st of a year will be made on July 31st of the same year. First Interest on subsequent allotment would be made on July 31st of following year. Record date I s15 days prior to interest payment date. 14. How is the interest earned on these bonds taxed for me? 8 | P a g e There is no deduction of tax at source on the interest payable to the Resident Indian investors on PFC’s 54EC Bonds. However, such investor may be required to pay tax on the interest income as advance tax as per applicable law. 15. I have PFC’s 54EC Capital Gain Bonds in physical mode. Do I need to surrender the Physical Bond Certificate on its maturity/redemption after 5 years? You are not required to surrender the physical Bond Certificate of PFC’s 54EC Bonds on its redemption/maturity. The bonds will be automatically redeemed by PFC on maturity (i. e. on the expiry of 5 years from the deemed date of allotment) and the redemption proceeds would be paid to the registered bondholders. 16. How should I intimate any change in the Bank account details / address/ nomination detail/etc.? All the Forms for modification request in the bank account detail/address/nomination/etc. are available at https://pfcindia.com/ensite/Home/VS/10246 The link also takes care of requirement for transmission, indemnity form in case of request for issuance of duplicate bond certificate. ***** Disclaimer : Various features given in above FAQs in respect of PFC’s 54EC Capital Gain Bonds have been explained in the Information Memorandum, which are available on websites of PFC as well as Registrar to the Issue. Investors are advised to read the same alongwith related documents carefully before making any investment in PFC’s 54EC Capital Gain Bonds. In case of any discrepancy between above FAQs and Information Memorandum, the paragraph stated in the Information Memorandum will prevail.

PFC 54EC Capital Gain Tax Exemption Bonds; 54EC bonds Frequently Asked Questions – 54EC Capital Gain Tax Exemption Bonds 1. What are long term specified assets specified for benefits u/s 54EC of the Income Tax Act 1961? The long term specified assets under section 54EC of the Income Tax Act are any bonds redeemable after 5* (Five) years issued by notified companies (presently 4), which also includes Power Finance Corporation Ltd (PFC), a Government of India Enterprise under the administrative control of Ministry of Power and is classified as an Infrastructure Finance Company (NBFC-IFC) by the Reserve Bank of India. * The period was 3 (three) years for bonds issued by the then eligible companies between 01.04.2007 to 31.03.2018 2. Is there a ceiling on the amount of exemption to be claimed under section 54EC of the Act? Yes. There is a ceiling of Rs. 50 lakhs in a financial year on the investment in 54EC Bonds. 3. What is the time limit within which one has to make investment in 54EC Bonds? One has to invest in the 54EC Bonds within a period of 6 months from the date of sale of original asset. 4. Is the benefit available against Short Term Capital Gains? No. This benefit can only be claimed against long term capital gains. 5. Whether 54EC Bonds can be redeemed before the maturity period of five years? No. These bonds can not be redeemed before the specified maturity period. 6. Can a person invest more than Rs. 50 lakh in 54EC bonds? No. There is a limit of Rs 50 lakh for investment in the 54EC Bonds for availing benefit under Section 54EC of the Act. ***** Disclaimer : PFC does not provide tax, investment, legal, or accounting advice. The above material has been prepared for informational purposes only and is based on our understanding. The above is not intended to provide, and should not be relied on for tax, investment, legal or accounting etc. advice. PFC does not assume any responsibility/liability for any rejection of tax benefit, penalty, loss or any other kind of adverse outcome in any way for actions taken based on the above material. One should consult own tax, investment, legal and accounting etc. advisors before engaging in any transaction.

PFC 54EC Capital Gain Tax Exemption Bonds