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Home  > Products > Distribution > Online Bonds

  • Know More
    About Bonds

About Bonds

  • A Bond is a debt instrument issued for the purpose of raising capital by borrowing.
  • Bonds can be issued by companies, financial institutions or the government. Bonds issued by the government are considered the safest bonds.
  • Bonds can be divided into different categories based on tax status, credit rating, issuer type and maturity.
  • Bonds are suitable for regular income purposes.
  • Specific tax saving or tax free bonds are available that offer certain tax benefits to the investor.

8% GOI Taxable Bonds

  • The 8% Government of India Savings (taxable) bonds, 2003 is a bond issued by the Reserve Bank of India (RBI) commencing April 21, 2003. The bonds are available for purchase by individuals on tap i.e. you can buy them as and when required. As the name indicates, the rate of interest offered on the bond is 8% per annum. Interest is taxable in the hands of the investor. Since bonds are issued on behalf of the Government of India, it is the safest investment any investor can look for. However, interest on the bonds is taxable and it has a lock in of six years, which makes the bond less favourable over other investment options

Tenure ROI(%) P.A Compounding
6 Years 8.0% Half Yearly
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Salient Features
  • Eligibility for Investments
  • The Bonds may be held by An individual, not being a Non-Resident Indian (NRI) , A Hindu Undivided Family. (+)
  • Limit of Investment
  • There is no maximum limit for investment in the Bonds.
  • Subscription
  • Subscription to the Bonds will be in the form of Cash/Drafts/Cheques. Cheques or drafts should be drawn in favour of the Receiving Office, specified the respective Application Form.
  • Tax Treatment
  • 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. (+)
  • Issue Price
  • The Bonds will be issued at par (+)
  • Form
  • The Bonds will be issued and held at the credit of the holder in an account called Bond Ledger Account (BLA) (+)
  • Applications
  • Applications for the Bonds may be made in the prescribed form or in any other form as near as thereto stating clearly the amount and the full name and address of the applicant (+)
  • Receiving Offices
  • Applications for the Bonds in the form of Bond Ledger Account will be received at (+)
  • Nomination
  • A sole holder or a sole surviving holder of a Bond, being an individual, may nominate in such prescribed form or as near thereto as may be, one or more persons who shall be entitled to the Bond and the payment thereon in the event of his/her death
  • Transferability
  • The Bond in the form of Bond Ledger Account shall not be transferable.
  • Interest
  • The bond will be issued in cumulative and non-cumulative form, at the option of the investor. (+)

Capital Gain Bonds

  • In accordance with section 54 EC of the Income Tax Act, 1961, all categories of tax payers would be eligible to save tax in respect of long term capital gains by making investments in certain Bonds prescribed.
  • These bonds are classified as 'long-term specified asset' and are issued by REC, NHAI, PFC and IRFC.
  • These bonds are specifically for investors who have made some long term capital gains, and would like to save capital gain taxes on this amount.
  • Only long term capital gains are eligible for these bonds though, and short term gains are not covered under section 54EC.
  • The interest from these bonds is fully taxable

Condition for Exemption from Tax U/S 54 EC:

  • The entire capital gain realized is invested within 6 Months of the date of transfer in eligible bonds
  • Such investment is held for 3 Years
  • To avail of capital gain exemption, the bonds so acquired cannot be transferred or converted into money or any loan or advance can be on security of such bond with 3 years from date of acquisition else, the benefit would be withdrawn.
  • If the amount invested in bonds is less than the capital gains realized, only proportionate capital gains would be exempt from tax.

REC Capital Gains Bonds

  • Rural Electrification Corporation Limited (REC) is a Navratna Company functioning under the purview of the Ministry of Power.
  • It’s a public Infrastructure Finance Company in India’s power sector.
  • The company finances and promotes rural electrification projects across India.
  • The company provides loans to Central/ State Sector Power Utilities, State Electricity Boards, Rural Electric Cooperatives, NGOs and Private Power Developers.
  • The company is listed on both National Stock Exchange and Bombay Stock Exchange.
  • Business operations in India are supported by a network of 13 Project Offices and 5 Zonal Offices, headquartered in New Delhi.

Rural Electrification Corp Bonds

Company Name Rating ROI (%) Tenure Minimum Application Maximum Application Tax Status Transferability Mode of Interest Interest Payable on
REC AAA 5.25% 3 years 20000
(2 bonds)
5000000
(500 Bonds)
Taxable Not Allowed Annually 30th June
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NHAI Capital Gain Bonds Series XII

  • National Highways Authority of India (NHAI) is an autonomous agency of the Government of India, responsible for management of a network of over 50,000 km of National Highways out of 1,15,000 km in India.
  • It is a nodal agency of the Ministry of Road Transport and Highways.
  • NHAI has signed a memorandum of understanding (MoU) with the Indian Space Research Organization for satellite mapping of highways.
  • The Authority was operationalized in February, 1995 .
  • The company is listed on both National Stock Exchange and Bombay Stock Exchange

National Highway Authorty of India Bonds

Company Name Rating ROI (%) Tenure Minimum Application Maximum Application Tax Status Transferability Mode of Interest Interest Payable on
NHAI AAA 5.25% 3 years 10000
(1 bond)
5000000
(500 Bonds)
Taxable Not Allowed Annually 1st April
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PFC Capital Gain Bonds Series I

  • The Power Finance Corporation Ltd. Incorporated on July 16th, 1986, Company was conferred the title of a 'Navratna CPSE' in June, 2007 and it’s a leading Non-Banking Financial Corporation in the Country.
  • It is the financial back bone of Indian Power Sector.
  • PFC's registered office is located at New Delhi and regional offices are located at Mumbai and Chennai.
  • It’s a consistently profit-making and dividend-paying company & also Strong asset quality reflected in low NPAs in the company.The company is listed on both National Stock Exchange and Bombay Stock Exchange

Power Finance Corporation Capital Gain Bonds Series I

Company Name Rating ROI (%) Tenure Minimum Application Maximum Application Tax Status Transferability Mode of Interest Interest Payable on
PFC AAA 5.25% 3 years 20000
(2 bonds)
5000000
(500 Bonds)
Taxable Not Allowed Annually 31st July
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IRFC Capital Gain Bonds Series I

  • Indian Railway Finance Corporation (IRFC) was set up on 12th December, 1986 as the dedicated financing arm of the Indian Railways for mobilizing funds from domestic as well as overseas Capital Markets.
  • IRFC is a Schedule ‘A’ Public Sector Enterprise under the administrative control of the Ministry of Railways, Govt.
  • In more than 30 years of existence, IRFC has played a significant role in supporting the expansion of the Indian Railways and related entities by financing a significant proportion of its annual plan outlay.
  • Company raises money through financial bonds and from banks and financial institutions.

Indian Railway Finance Corporation Capital Gain Bonds Series I

Company Name Rating ROI (%) Tenure Minimum Application Maximum Application Tax Status Transferability Mode of Interest Interest Payable on
IRFC AAA 5.25% 3 years 20000
(2 bonds)
5000000
(500 Bonds)
Taxable Not Allowed Annually 15th October
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