India Finance Research Brief: Capital gains bonds (Section 85, formerly 54EC) for property sales

Official updates to review

• SEBI: Completion of RC No. 8924 of 2025 issued against Yuvika Tradewing LLP (PAN - AABFY4620R) in the matter of Cressanda Solutions Limited — 16 Oct, 2026 +0530
• SEBI: Review of certain aspects of the Closing Auction Session, market timings and settlement methodology for derivatives contracts — 15 Oct, 2026 +0530
• SEBI: Prohibitory Order no. 1575/2026 issued against Venkatachari Suresh in the matter of Securekloud Technologies Ltd under RC No. 8710 of 2025 — 15 Oct, 2026 +0530
• RBI: Auction of State Government Securities — Thu, 15 Oct 2026 17:50:00
• RBI: Developments in India’s Balance of Payments for the Month of August 2026 — Thu, 15 Oct 2026 17:30:00
• RBI: RBI issues Frequently Asked Questions on Foreign Exchange Risk Reserve — Thu, 15 Oct 2026 17:10:00

Findost links to primary sources so readers can verify the underlying announcement before forming a view.

Educational explainer: Capital gains bonds (Section 85, formerly 54EC) for property sales

Sold a house, land or building and facing a capital-gains tax bill? The capital-gains bond exemption lets you avoid tax on long-term gains from land or buildings, up to the amount you put into specified bonds. From 1 April 2026 this exemption sits in [Section 85 of the Income-tax Act, 2025](https://www.incometaxindia.gov.in/w/section-85-55). It was Section 54EC of the 1961 Act, and the bonds are still widely called "54EC bonds".

How it works, step by step:

1. You sell land or a building (or both) held for more than 24 months, so a long-term capital gain arises.
2. Within 6 months of the transfer, you invest the gain in a notified "long-term specified asset": bonds redeemable after five years from NHAI, REC or another notified issuer (for example PFC, IRFC, HUDCO or IREDA). Check that the series you buy is notified for your transfer date.
3. The capital gain you invest is not charged to tax. Any gain above the amount invested is taxed as usual.

The fine print:

• Limit: ₹50 lakh. Total investment cannot exceed ₹50 lakh in a tax year, or across the year of transfer and the next tax year together (s.85(2)).
• Lock-in: 5 years. If you transfer the bonds or convert them into money within five years, the exempted gain becomes taxable in that year. A loan or advance taken against the bonds is treated as converting them into money.
• Interest: REC's current series (Series XX, open 1 April 2026 to 31 March 2027) pays 5.25% a year, paid annually on 30 June (REC term sheet). The interest is taxable. The bonds carry AAA ratings from ICRA, CRISIL, CARE and India Ratings; they are issued by public-sector companies but are not a sovereign guarantee.
• Applies only to gains from land or buildings, not shares or mutual funds.

How to think about it (educational, not a recommendation): the trade-off is a tax-free but locked, lower-yield bond against paying long-term capital-gains tax (generally 12.5%) and investing what's left freely. The right answer depends on your gain, other reinvestment options such as the residential-house exemption, liquidity needs and tax position. Consult a qualified tax professional before acting.

Full Direct-answer guide: Section 54EC capital gains bonds on Findost — educational upgrade of this FAQ topic with statute caveats.

Sources and scope

• SEBI RSS feed
• RBI press-release RSS feed
• Google Trends India

Optional Search Console, Reddit and X inputs are used privately for editorial topic selection. Their raw queries, posts, accounts and identifiers are never published. This brief is not personalised investment, tax, or legal advice, and it does not recommend securities or products. Verify source updates and consult a qualified professional before acting.