Sunday, 31 December 2023

National Highway Authority of India (NHAI) Bonds Overview:

Commonly referred to as Sec 54EC Bonds, the National Highway Authority of India Bonds serves as an avenue for individuals to mitigate taxes on long-term capital gains resulting from the sale of their investments. NHAI is responsible for the development and maintenance of national highways and various government-backed projects in India.


Key Features:

  • NHAI bonds, with the highest credit rating of AAA, are issued by an autonomous government agency, making them a secure investment.
  • NHAI, overseeing national highway projects, plays a pivotal role in toll fee collection to regulate traffic flow effectively.
  • The bonds have a lock-in period of 5 years and can be utilized for claiming a deduction under Section 54EC of the Income Tax Act, 1961, with a maximum deduction of ₹50 L.
  • Non-transferable and non-negotiable, NHAI bonds are subject to TDS deductions for NRI investors as per the DTAA form.

Investment Details and Interest:

  • The investment in NHAI bonds starts at a minimum of ₹10,000, equivalent to one bond, and extends up to a maximum of ₹50,00,000, representing 500 bonds.
  • As of February 2023, Nitin Gadkari, the Union Minister for Road, Transport, and Highways, announced the ministry's plan to release NHAI InvIT bonds every 15 days, offering attractive interest rates of up to 8.50%.
  • Interest on NHAI bonds is paid annually on April 1st, with the final interest disbursed upon maturity.

Conclusion:

Given their government regulation and AAA rating, NHAI bonds offer a relatively secure investment option. The decreasing debt of the highway authority strengthens its financial foundation. The government anticipates NHAI to generate a total collection exceeding ₹1.40 lakh crore. For those seeking a long-term, low-risk tax-saving scheme, NHAI presents a compelling option to consider.

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