Capital gains tax exemption bonds are also known as 54EC bonds, as investment in these bonds allows exemption under section 54 EC of the Income-tax Act. These bonds are offered to investors who earned long-term capital gains from land or building or both and would like tax exemption on these gains. The eligible bonds under section 54EC include bonds on offer by Rural Electrification Corporation Ltd (REC) and National Highways Authority of India (NHAI). The maximum limit for investing in 54EC bonds is ₹50 lakh per financial year, whereas minimum investment is capped at ₹20,000 and ₹10,000 respectively in REC and NHAI bonds. These bonds come with a lock-in period of 5 years (effective from April 2018) and are non-transferable. Both REC and NHAI bonds offer an interest rate of 5.75% per annum, payable annually. Interest earned from 54EC bonds is taxable; however, no TDS is deducted on interest. 54EC bonds are AAA rated bonds and are backed by the government; hence, the risk of interest and capital payment is protected.