Are REC, NHAI bonds a good investment?

The finance minister has maintained a Rs 50 lakh limit on saving capital gains tax by investing in specified bonds. But the low rates of interest these bonds are offering this year make them unattractive reports CNBC-TV18.
  • Language
  • App
  • Subscriptions
  • Specials
  • Sign-In
  • Register
GeStepAhead GrowMyMoney
moneycontrol.com

Home » News » Economy

Mar 21, 2007, 09.56 AM | Source: CNBC-TV18

Are REC, NHAI bonds a good investment?

The finance minister has maintained a Rs 50 lakh limit on saving capital gains tax by investing in specified bonds. But the low rates of interest these bonds are offering this year make them unattractive reports CNBC-TV18.

Like this story, share it with millions of investors on M3

Are REC, NHAI bonds a good investment?

The finance minister has maintained a Rs 50 lakh limit on saving capital gains tax by investing in specified bonds. But the low rates of interest these bonds are offering this year make them unattractive reports CNBC-TV18.

Post Your Comments

Share Cancel

Are REC, NHAI bonds a good investment?

The Finance Minister has maintained a Rs 50 lakh limit on saving capital gains tax by investing in specified bonds. But the low rates of interest these bonds are offering this year make them unattractive reports CNBC-TV18.

 

You can invest your capital gains from any asset including property in bonds issued by REC or NHAI and not pay tax. The Finance Minister even maintained a Rs 50 lakh per person limit on these bonds in this year's Budget. These bonds offer a mere 5.25 % interest rate that is taxable on maturity.

 

"This offers a capital gains tax advantage, so interest rates are kept lower. In fact for this issue it is 5.25% and fully taxable, which comes to hardly 3% and that does not even cover inflation," says Sandeep Shanbhag, tax and investment consultant.

 

If you choose to pay 20% tax on your capital gains of Rs 10 lakh and invest the balance in equity or equity based mutual funds, you stand to earn 10% higher - that too tax free. Assuming a return of 15%, the net amount at the end of three years comes to over Rs 12 lakh.

 

While investing in capital gains bonds may give you the satisfaction of saving tax, there may be better ways to enhance your returns even though it may mean taking a little risk.

Buy, Hold, Sell ? Hear it first on M3
Are REC, NHAI bonds a good investment?

See all

Get started using your favorite social network

or

Login using moneycontrol ID

Username
Password

Need help logging in? Reset password.

Don´t have an account? Sign Up

Get started using your favorite social network

or

Simply sign up using this short form

* mandatory

UserName*

Username should be atleast 4 character

Password*

Password should be 8 or more characters,
atleast 1 number, 1 symbol & 1 upper case letter

Alert

Your Password should contain
  • 8 or more characters
  • At least 1 number
  • At least 1 symbol
  • At least 1 upper case letter
Confirm Password*
Email
Already have an account? Login