Investment in Bonds u/s 54EC

This query is : Resolved

Jayesh Jagetiya (Querist)
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15 April 2009 Dear Friends,
We are in process of Invesing Rs. 50 Lacs in NHAI/REC Bonds u/s 54EC to save Income Tax on Capital Gain. We will get 6.25% interest pa on the same.

Will this interset Taxable in our hand? if yes, at which rate?

REC/NHAI has been given special exemption from deduction of TDS on the same.

Manmohan ACA, CS

Manmohan ACA, CS (Expert)
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15 April 2009 The REC bond can not be transferred within three years. Interest is payable annually on 30th June every year till date of redemption. Therefore ,interest received every year shall be taxable year wise.it is Taxable as normal rate of income tax (i.e. slab rate of income tax )However,vide notification No. 359/2002 dated 2nd December, 2002, the Corporation has been exempted from deduction of tax at source under section 193 of the Income Tax Act 1961, on the interest payable on REC 54EC Capital Gain Tax Exemption Bonds.