Capital Gain Bonds:

Capital gain bonds are financial instruments issued by certain government entities to provide tax-saving opportunities to investors. These bonds offer tax exemptions on long-term capital gains from selling assets like real estate, provided the gains are invested in these specified bonds. The lock-in period for such investments is usually ten years or more.

You can save capital gains tax arising out sale of capital assets e.g. property etc by investing in capital gains bonds u/s 54EC. 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 2 years. You can invest the gain in certain specified bonds to claim tax exemption within 6 months of the date of sale of the asset. 54EC bonds, or capital gains bonds, are one of the best way to save long-term capital gain tax arising out of sale a capital asset.The maximum limit for investing in 54EC bonds is Rs. 50,00,000. The eligible bonds under Section 54EC are REC (Rural Electrification Corporation Ltd), PFC (Power Finance Corporation Ltd) , NHAI (National Highways Authority of India) and IRFC (Indian Railways Finance Corporation Limited). The tenure of these Bonds are usually 5 years.