NHAI Capital Gains Bonds: Features and Benefits

National Highways Authority of India (NHAI) Bonds allow individuals to avail exemption from income tax applicable on capital gains made from sale of a long-term capital asset. In this blog, we will explore the benefits and procedure of investing in NHAI capital gains bonds in India, and why they are an attractive investment option for investors. 

NHAI Capital Gains Bonds
NHAI Capital Gains Bonds

What are Capital Gains Bonds?

When a long-term capital asset is sold after being held for more than two years, the resulting profit is known as a long-term capital gain. To avoid paying tax on this gain, you can invest in capital gains bonds within six months of the sale of the asset. Also known as 54EC bonds, these bonds are issued by infrastructure companies, backed by the government, including Rural Electrification Corporation (REC), Indian Railways Finance Corporation (IRFC), Power Finance Corporation (PFC) and National Highway Authority of India (NHAI).

Schedule a call with an investment expert to get complete help regarding investment in 54EC Bonds in India. 

What are NHAI Capital Gains Bonds?

The National Highways Authority of India (NHAI) is a government agency established through an act of parliament. It is responsible for the construction and maintenance of national highways in India. In order to raise funds for the development of these highways, the NHAI issues bonds to the public. These bonds are known as NHAI capital gains bonds and are a popular investment option among Indian residents as well as NRI investors in India. 

Features of NHAI Capital Gains Bonds

Listed below are the features of NHAI Capital Gains Bonds in a tabular form:

Issued byNational Highways Authority of India
RegistrarBeetal Financial & Computer Services (P) Ltd. 
Investment OptionOnline or Offline
EligibilityAny individual, Hindu Undivided Family (HUF), NRIs, partnership firms, companies etc
Minimum Investment Rs. 10,000/- i.e. one bond 
Maximum Investment Rs. 50, 00,000/- i.e. 500 bonds
Credit RatingAAA by CRISIL
Interest Rate5.25%
Interest PaymentAnnually on 1st April and final interest at the time of maturity
Lock-in Period5 Years
Transferability Non-transferable & non-negotiable
Loan FacilityNo
Tax/TDSNo TDS, Interest is taxable; principal amount on maturity is tax free
Features of NHAI Capital Gains Bonds

Note: Interest rate is subject to periodic changes. 

Why Should One Choose NHAI Bonds?

Given below are the benefits of investing in NHAI Capital Gains Bonds:

  • NHAI capital gains bonds are backed by the Government of India, which makes them a relatively safe investment option.
  • While the interest on these bonds is taxable, no TDS deduction is applicable, and they are exempt from wealth tax as well.  
  • NHAI bonds are AAA-rated by CRISIL. 
  • These bonds have a lock-in period of five years and are non-transferrable. 
  • The interest rate for NHAI bonds is 5.25% per annum. 
  • Investing in NHAI bonds is quite easy and can be done either online or offline through various channels such as banks, post offices, and financial institutions.

How to Buy NHAI Capital Gains Bonds Online?

Follow the given below steps to apply for NHAI capital gains bonds online: 

  • Download NHAI 54EC Capital Gain Bond Application form 2023-24.
  • Fill in the basic details like your name, address, date of birth, etc. 
  • You can choose between Physical and Demat mode. In case, you choose the ‘Demat Mode’, enter your Demat account details.
  • Attach the following documents:
  1. Self-attested PAN card as well as proof of address 
  2. Canceled copy of a cheque 
  • Make the online payment via debit card or net banking. 
  • Once the payment is done, you will receive an acknowledgement for the same on registered email ID. 
  • The date of credit of funds in the issuer’s bank account will be considered as the effective date of investment. 

Contact SBNRI

NRI Investment in Bonds is a very popular and rewarding opportunity. In addition, capital bonds offer dual benefits of wealth creation and tax saving. If you have any doubts or queries and want specialized advice from experts at SBNRI, contact us using the button below. Also visit our blog and YouTube Channel for more details.

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Is interest earned on NHAI capital gain bonds taxable?

Yes, the interest income on buying NHAI bonds is taxed, but there is no TDS on it.

What is the lock-in period for NHAI bonds?

National Highways Authority of India (NHAI) capital gains bonds are issued for a lock-in period of 5 years and are non-transferable at any point of time.

What is the interest rate on NHAI bonds?

The interest rate for NHAI bonds is 5.25%, and it is paid annually. However, you must note that interest rates are subject to revision from time to time.

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