Earn 8% Return with Government of India Savings Bond

Written on Saturday, November 28, 2015
By Mohit Mittal- AVP & Head Fixed Income, Bajaj Capital Ltd.

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As most of the Banks have reduced their FD Rates to 7.50-8%, Government of India 8% Taxable Bonds have got attraction being 100% secured and guaranteed by RBI on redemption. GOI (Government of India) bonds are low risk debt instruments issued by the Government of India against underlying assets of the government. The return on investment (ROI) is comparable to Bank FDs and is guaranteed of being repaid in fixed time intervals along with the interests.

 

Who Can Invest

 

A. Individuals

 

 

B. Hindu Undivided Family

 

 

C. Charitable Institutions

-A company registered under section 25 of the Indian Companies Act 1956.

-An institution that has obtained a certificate of Registration as Charitable Institution in accordance with the law in force.

-Any institution that obtained Certificate from an income tax authority under section 80 G of the Income Tax Act. 1961.

-Any institution notified by the Central Government under clauses (ii) or (iii) of Sub – Section (1) of Section 35 of the Income Tax Act, 1961.

 

D. University

A university established under Central, State or Provincial Act, including an institution declared to be a university under Section 3 of the University Grants Commission Act.

#NRIs are not eligible for investment in saving bonds.

 

Rate of Return

 

These taxable bonds will offer 8 percent return per annum, payable half-yearly on 1st February and 1st August. Both Cumulative and non-cumulative options are available. Interest on Bond in the form of "Bond Ledger Account" will be paid, by cheque/warrant or through ECS by credit to bank account of the holder as per the option exercised by the investor/holder.

 

Taxation

 

Income-Tax: Interest on the Bonds will be taxable under the Income-Tax Act, 1961 as applicable according to the relevant tax status of the bond holder.

 

Wealth Tax: The Bonds will be exempt from Wealth-tax under the Wealth- tax Act, 1957.

 

 

One can invest in these bonds with a minimum of Rs. 1,000 and further in multiple of 1,000. There is no capping on the upper limit of investment. To redeem, on maturity investor needs to discharge Certificate of Holding and submit the same to the Issuer.

 

 

#Government of India taxable bonds is non-transferable and non-tradable. 

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