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A government bond is a type of debt-based investment, where you loan money to a government in return for an agreed rate of interest. Governments use them to raise funds that can be spent on new projects or infrastructure, and investors can use them to get a set return paid at regular intervals.
RBI Bonds
The salient features of the Bond are as follows:
Eligibility for Investment
The Bonds may be held by:
An individual, not being a Non-Resident Indian (NRI)
In his or her individual capacity, or
In an individual capacity on joint basis, or
In an individual capacity on anyone or survivor basis, or
On behalf of a minor as father/mother/legal guardian
A Hindu Undivided Family.
Charitable Institution' to mean a Company registered under Section 25 of the Indian Companies Act 1956 or
An institution which has obtained a Certificate of Registration as a charitable institution in accordance with a law in force; or
Any institution which has obtained a certificate from Income Tax Authority for the purpose of Section 80G of the Income Tax Act, 1961.
A university established or incorporated by a Central, State or Provincial Act, and includes an institution declared under section 3 of the UGC Act, 1956 (3 of 1956), to be a university for the purposes of that Act.
Limit of Investment
There is no maximum limit for investment in the Bonds.
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.
Wealth Tax: The Bonds will be exempt from Wealth-tax under the Wealth- Tax Act, 1957.
Nomination
A sole holder or a sole surviving holder of a Bond, being an individual, may nominate in form B (Annex – 4) 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.
The Bond will bear interest at the rate of 8% per annum. Interest on non-cumulative bonds will be payable at half-yearly intervals from the date of issue. Interest on cumulative bonds will be compounded with half-yearly rests and will be payable on maturity along with the principal.
Advances / Tradability against Bonds
The Bonds shall not be tradeable in the secondary market and shall not be eligible as collateral for loans from banks, financial Institutions and Non Banking Financial Companies, (NBFC) etc.
Repayment
The Bonds shall be repayable on the expiry of 6 (Six) years from the date of issue. No interest would accrue after the maturity of the Bond.
Capital Gain Bonds (NHAI, PFC, REC etc.)
Quick Contact
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