How to Encash Capital Gain Bonds ?
In this article I will share you the process, how to encash long-term capital gain bonds named RECL and NHAI. And will discuss why capital gain bonds is necessary to get exempt from tax under section 54EC of the act.
The most popular capital gain bonds in India are Rural Electrification Corporation Limited (RECL) and National Highway Authority of India (NHAI). Both the capital gain bonds gives an average return of 5.75% per annum with a locking period of 3years. Get full exemption from tax if capital gain bonds investment had done within 6 months of property sell or 20% tax will be levied by an Indian government.
How to invest in Capital Gain Bonds ?
To invest in capital gain bonds like REC or NHAI, first you need to take print of application form online. Fill up the required blank form with an appropriate data like Name, address, bank details etc. Then submit an application form along with the total investment amount cheque, identity proof and address proof self attested to HDFC Bank. The bank officials will check the fill up form for any error, if any error found rectify it and re-submit again. Take an acknowledgement slip from the bank officials for future reference once they applied your applications.
Note: There are certain branches of HDFC Bank who receive capital bonds, not all branch. And the physical capital gain bonds hardly takes 15-20 days to get deliver at registered address.
How to encash Capital Gain Bonds ?
As we have discussed above the benefits of doing capital bonds, in brief if a parental or personal property had been sold, and the lumpsum money has credited to the bank account. As per Indian tax act, 20% tax would be levied on long term capital gain on sale of real estate plus a cess of 3% if sale fulfills certain conditions. For tax exemptions it is advised to an every applicant to buy REC or NHAI capital gain bonds locking period of 3 years. Once the locking period gets over, to encash capital gain bonds, the applicant needs to open one demat account in a respective stockbroker company like Aditya Birla Money Ltd, ICICI Securities etc. Surrender that physical received bonds for dematerilastion to the respective stockbroker where you have opened a demat account. The offline bonds will be sent to registrar for demat on behalf of you from your stockbroker. Please note check your demat account number carefully before applying for dematerilisation and take receipt of DRF. These process can take 15-30 days maximum to get credit on your demat account. Followup weekly with your stockbroker regarding the bonds status. Once the capital gain bond units got credit to your demat holdings then you can plan for encashment as per your financial needs.
These are the major procedures to buy and sell capital gain bonds. I hope I could have manage to make you understand in an easier way. If any doubts or any clarifications regarding this required please comment and raise your query.
