List of Capital Gain Bonds in India 2026

When you sell assets such as land or property, the profit earned is treated as capital gains and may attract tax. However, investors can reduce this tax liability by investing the gains in specified capital gain bonds under Section 54EC of the Income Tax Act, 1961. 

These bonds are issued by government-backed institutions and offer a combination of tax exemption and fixed interest income. Continue reading for a list of capital gain bonds in India for 2026, along with key details to help investors understand available options and make informed tax-saving investment decisions.

What are Capital Gain Bonds?

Capital gain bonds are government-backed bonds that allow investors to save tax on long-term capital gains arising from the sale of certain assets, such as property or land.Under Section 54EC of the Income Tax Act, 1961, individuals can invest the capital gains amount in specified bonds issued by authorized institutions like government-backed financial bodies. 

By investing in these bonds within the prescribed time limit, investors can claim exemption from paying tax on the capital gains. These bonds usually come with a fixed lock-in period, during which the investment cannot be redeemed or transferred. They also provide a fixed interest rate, making them a stable investment option while helping taxpayers reduce their tax liability.

Key Features & Benefits of Capital Gain Bonds

Here are some of the key features and benefits of capital gains bonds- 

Tax Exemption Under Section 54EC

One of the primary benefits of capital gain bonds is that they allow investors to claim tax exemption on long-term capital gains under Section 54EC of the Income Tax Act, 1961, when gains from the sale of certain assets are invested in these bonds.

Government-Backed Issuers

Capital gain bonds are issued by government-backed institutions, which provides a level of reliability and stability for investors.

Fixed Interest Income

These bonds offer a fixed rate of interest, allowing investors to earn predictable returns during the investment period.

Defined Lock-in Period

Capital gain bonds generally have a lock-in period of 5 years, during which the investment cannot be sold, transferred, or pledged.

Investment Limit

Investors can claim tax exemption by investing up to ₹50 lakh in a financial year in capital gain bonds.

Low-Risk Investment Option

Since these bonds are issued by government-backed entities, they are generally considered a relatively low-risk investment compared to many market-linked instruments.

Helps in Tax Planning

Capital gain bonds help investors manage their tax liability efficiently when they earn long-term capital gains from the sale of eligible assets.

List of Capital Gain Bonds in India

Who Should Invest in Capital Gain Bonds?

Capital gain bonds are suitable for investors who want to save tax on long-term capital gains while keeping their funds in a relatively stable investment. These bonds are commonly used as part of tax planning strategies after selling certain capital assets.

Investors Who Have Sold Property or Land

Individuals who have earned long-term capital gains from selling property, land, or certain assets can invest in capital gain bonds to claim tax exemption under Section 54EC.

Tax-Saving Investors

People looking for legal ways to reduce their capital gains tax liability may consider capital gain bonds as they allow tax exemption within the prescribed investment limit.

Conservative Investors

Investors who prefer stable and predictable returns rather than market-linked returns may find these bonds suitable because they offer fixed interest income.

Investors With a Medium-Term Investment Horizon

Since capital gain bonds typically have a 5-year lock-in period, they may be appropriate for individuals who can keep their funds invested for this duration without needing immediate liquidity.

Investors Seeking Low-Risk Options

These bonds may appeal to those who want to allocate a portion of their portfolio to relatively low-risk, fixed-income instruments issued by government-backed institutions.

Risks Involved in Capital Gain Bonds

Here are some of the risks involved in the capital gains bonds-

Lock-in Period

Capital gain bonds usually come with a 5-year lock-in period, during which the investment cannot be redeemed, transferred, or pledged. This limits liquidity and access to funds during the lock-in period.

Lower Interest Rates

The interest rates offered on capital gain bonds are generally lower compared to some other fixed-income instruments, as the primary benefit of these bonds is tax exemption rather than higher returns.

Inflation Risk

Since the interest rate on capital gain bonds is fixed, rising inflation may reduce the real value of returns over time.

Tax on Interest Income

While the investment helps save tax on capital gains, the interest earned on these bonds is taxable according to the investor’s applicable income tax slab.

Limited Investment Window

To claim tax exemption, investors must invest within a specified time frame (usually within 6 months) from the date of transfer of the asset. Missing this window means losing the tax benefit.

Investment Limit

There is a maximum investment limit of ₹50 lakh per financial year under Section 54EC, which may restrict the tax-saving benefit for investors with higher capital gains.

Tax Applicability on Capital Gain Bonds

Tax treatment of capital gain bonds in India is governed by Section 54EC of the Income Tax Act, 1961. These bonds are specifically designed to help investors save tax on long-term capital gains arising from the sale of certain assets.

Tax Exemption on Capital Gains

If an investor sells a capital asset such as land or property and invests the capital gains in eligible capital gain bonds within 6 months of the sale, they can claim tax exemption on the invested amount under Section 54EC.

Maximum Investment Limit

The tax exemption is available for investments up to ₹50 lakh in a financial year in eligible capital gain bonds.

Lock-in Period Requirement

To retain the tax benefit, the bonds must be held for a minimum lock-in period of 5 years. If the bonds are transferred, pledged, or redeemed before this period, the tax exemption may be reversed.

Tax on Interest Income

Although the capital gains invested in these bonds may qualify for tax exemption, the interest earned on capital gain bonds is taxable. The interest is added to the investor’s total income and taxed according to the applicable income tax slab.

No TDS on Interest

Generally, no TDS is deducted on interest income from capital gain bonds, but investors must declare the interest income while filing their income tax returns.

Disclaimer

The capital gain bond data on this page is sourced from the NSDL website and is based on publicly available market information as on 11 March 2026. Prices, yields, trade values, and other related details are subject to change in real time depending on market movements and liquidity. This content is intended solely for informational and educational purposes and should not be considered as investment advice, recommendation, or an offer to buy or sell any securities.