Bond

Capital Gain Bonds (54EC Bonds): According to section 54EC, any person (individuals, HUFs, partnership firms, companies etc.) can avail exemption in respect of long-term capital gains (arising from the sale of long term capital asset other than equity shares and securities), if the capital gain is invested in Capital Gain bonds. The exemption will be the amount of capital gain or the amount of investment made, whichever is less.

Interest rate offered on these bonds is 6% per annum. The exemption is subject to:

The investment is made within a period of 6 months from the date of transfer of the asset
Lock-in-period of 3 years
Bonds sold, transferred or converted into money or any loan or advance taken on security of such bond within a period of 3 years from the date of acquisition, the capital gains earlier exempt are taxable in the year of sale or transfer of the bonds
Maximum investment limit of up to Rs. 50 Lakhs in a Financial Year per individual.
If the amount invested in bonds is less than the capital gains realized, only proportionate capital gains would be exempt from tax.

Bonds and stocks are both securities, but the major difference between the two is that (capital) stockholders have an equity stake in a company (that is, they are owners), whereas bondholders have a creditor stake in the company (that is, they are lenders). Being a creditor, bondholders have priority over stockholders.

This means they will be repaid in advance of stockholders, but will rank behind secured creditors, in the event of bankruptcy.[3] Another difference is that bonds usually have a defined term, or maturity, after which the bond is redeemed, whereas stocks typically remain outstanding indefinitely. An exception is an irredeemable bond, such as a consol, which is a perpetuity, that is, a bond with no maturity.

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