85 Capital Gain Tax Exemption Bonds (erstwhile 54EC Bonds)

85 CGTE Bonds, or capital gains bonds, are one of the best way to save long-term capital gain tax. 85 CGTE Bonds are specifically meant for investors earning long-term capital gains and would like tax exemption on these gains. Tax deduction is available under section 85 CGTE Bonds of the Income Tax Act. 85 CGTE Bonds do not allow any tax exemption on short-term capital gains tax. Invest in 85 CGTE Bonds to get benefits of tax deduction. The maximum limit for investing in 85 CGTE Bonds is Rs. 50,00,000. The eligible bonds under Section 85 CGTE Bonds are REC (Rural Electrification Corporation Ltd), PFC (Power Finance Corporation Ltd), HUDCO (Housing and Urban Development Corporation) and IRFC (Indian Railways Finance Corporation Limited).

Key Features of 85 CGTE Bonds

85 CGTE Bonds are popular investment instruments as investing in 85 CGTE Bonds allows investors to claim tax deductions on long-term capital gains. 85 CGTE Bonds also offer other features.

  • Safe and Secure: 85 CGTE Bonds are AAA rated.
  • Interest: Interest on 85 CGTE Bonds is taxable. No TDS is deducted on interest from 54EC bonds and wealth tax is exempted.
  • Tenure: 85 CGTE Bonds come with a lock-in period of 5 years (effective from April 2018) and are non-transferable.
  • Investment amount: Minimum investment in 85 CGTE Bonds is 1 bond amounting to Rs. 10,000 and the maximum investment in 85 CGTE Bonds is 500 bonds amounting to Rs 50 lakhs in a financial year.
  • Interest Rate: 85 CGTE bonds offer 5.25% rate of interest payable annually.

Key Benefits of 85 CGTE Bonds

Individuals as well as members of HUF can make investments in 85 CGTE Bonds. You should invest in 85 CGTE Bonds within 6 months of transferring capital asset. Take a look at the benefits of investing in 85 CGTE Bonds.


SAVE TAX
Long-term capital gains from investments in 54EC bonds or sale of 54EC bonds can be reinvested in order to save tax.

SECURITY
85 CGTE bonds are backed by the government, hence the risk factor associated with buying 85 CGTE bonds is mitigated.

EARN & SAVE
Investing in 85 CGTE Bonds allows you to save tax while earning interest income from the 85 CGTE Bonds.

USER PREFERANCE
54EC Bonds can be held in either demat or physical form.

Bonds offered under sec 85 CGTE

With effect from 1 April 2026, the Income tax Act, 2025 has replaced the old section numbering of capital gain exemptions. Section 54EC (exemption on long term capital gains invested in specified bonds) is now renumbered and updated as Section 85.  85 CGTE would be available on sale of land or building (residential or commercial). The capital gains 85 CGTE bonds eligible for tax deductions can be issued only by REC (Rural Electrification Corporation Ltd), PFC (Power Finance Corporation Ltd), HUDCO (Housing and Urban Development Corporation) and IRFC (Indian Railways Finance Corporation Limited). Avail the opportunity to invest in 85 CGTE to gain tax deductions.


Download form for 85 CGTE Bonds

PFC 85 CGTE Bonds Download form - Click here

IRFC 85 CGTE Bonds Download form -  Click here

REC 85 CGTE Bonds Download form -  Click here

HUDCO 85 CGTE Bonds Dowload form - Click here

HUDCO 85 CGTE Bonds Apply Online - Click here

REC 85 CGTE Bonds Apply Online - Click here

With effect from 1 April 2026, the Income‑tax Act, 2025 has replaced the old section numbering of capital‑gain exemptions. Section 54EC (exemption on long‑term capital gains invested in specified bonds) is now renumbered and updated as Section 85.  85 CGTE would be available on sale of land or building (residential or commercial). The capital gains 85 CGTE bonds eligible for tax deductions can be issued only by REC (Rural Electrification Corporation Ltd), PFC (Power Finance Corporation Ltd), HUDCO (Housing and Urban Development Corporation) and IRFC (Indian Railways Finance Corporation Limited). Avail the opportunity to invest in 85 CGTE to gain tax deductions.

 

Educational Video

19-09-2018;
Bond, Tax free bond, RBI bond, 54EC
Looking for a secure and predictable source of income? Learn about investing in bonds and generating a predictable source of income with different types of bonds.

FAQs

Why to invest in 54 EC bonds?

54EC bonds are specifically meant for investors earning long-term capital gains and would like tax exemption on these gains. Tax deduction is available under section 54EC of the Income Tax Act.

Which bonds are eligible under the Section 54 EC?

REC (Rural Electrification Corporation), IRFC (Indian Railway Finance Corporation) & PFC (Power Finance Corporation Ltd) are the bonds eligible under Section 54 EC.

What is the mode of application?

You can apply for the 54 EC bonds offline (Physical) and online.

What are the modes of payment?

The payment can be done through cheque, DD or RTGS

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