NRI BankingValue Added ServicesDistribution of Capital Gain Bonds & Tax Free Bond


Capital Gain Bonds

Long-term capital gain is the gain that is derived out of a sale of an asset (Land or Building) that has been held for more than two years. For capital gains arising out of sale of property, a person has to pay long term capital gains at the rate of 20% with indexation.  The investor can choose to get exemption from this long term capital gain tax in 2 ways:

  1. Within a period of one year before or two years after the date of transfer of old house, the tax payer should acquire another residential house or should construct a residential house with in a period of three years from the date of transfer of old house.
  2. By investing in 54EC bonds, or capital gains bonds within 6 months of the date of sale of asset, which is another way to save long-term capital gain tax arising out of sale of capital asset. 

IFIN-SIB partnership for the distribution of Capital Gain Bonds

South Indian Bank has been enrolled as a Channel Partner for the distribution of Capital Gain Bonds through our tie up with IFIN- a subsidiary of IFCI (Industrial Financial Corporation of India) Financial services Limited.

Capital Gain bonds available are:

  1. REC (Rural Electrification Corporation Ltd)
  2. PFC (Power Finance Corporation Ltd)
  3. IRFC (Indian Railways Finance Corporation Limited)

These are AAA Rated Bonds indicating that they are highly stable and the face value of each bond is Rs. 10,000. 

Conditions to be met to avail tax exemptions under Section 54 EC of the Income Tax Act, 1961

  • The exemption on investment is allowed only against long term capital gains on the sale of the immovable property (i.e. sale of land or building or both).
  • The investment in the aforesaid bonds should be made within 6 months from the date of sale of the immovable property
  • The maximum amount that can be invested in these types of bonds is Rs 50, 00,000/- during the financial year.
  • The full amount has to be paid upfront along with the application
  • Such investment can be redeemed/ withdrawn only after 5 years 
Key Features of Capital Gain Bonds
5 years
Rate of Interest
5.25% p.a. payable annually
Interest is taxable although no TDS is deducted
Automatic Redemption after 5 Years
Mode of Holding
Physical or Demat
Min Investment
1 Bonds (Rs. 10,000)
Max Investment
500 Bonds (Rs. 50,00,000 Lacs)

For further details, please contact any branch of South Indian Bank or Retail Banking Department of the Bank.

Contact Address:
Retail Banking Department, The South Indian Bank Ltd., 2nd Floor, Do.No.4/461 A,
Shanu Towers,Opp. Appollo Tyres, Premier Jn, Kalamassery, Ernakulam
Kerala Pin Code: 683104
Ph: 0484- 2933538
Email: [email protected]