54 EC Bonds are popularly known for the tax benefits they provide under Section 54 EC of the Income Tax Act. These bonds are typically issued by the Power Finance Corp (PFC), Rural Electrification Company (REC), and the National Highways Authority of India (NHAI).
Government-backed entities such as, NHAI, REC, PFC, etc. issue tax-free bonds to raise capital. The capital is meant for long-term projects and these bonds have tenors of 10, 15 or 20 years. The interest earned from these bonds is exempt from taxation. Capital gains from the sale of bonds are taxable.
The policy: The RBI reviews data understands risks and prepares the economy for anticipated changes. On the surface, it may appear that the reserve bank didn’t do much in its October policy. However, leaving things unchanged reflects careful consideration. Inflation and growth will decide interest rate movements. Inflation is…