The 8% Government of India Savings (Taxable) Bonds, 2003 has been closed for subscription from January 2, 2018. Now the same bonds would be relaunched offering 7.75% interest and maturity of 7 years from January 10, 2018. We look at the salient features of these GOI bond so that you can decide if it’s right investment for you!
Interest Offered: 7.75% (compounded/payable half-yearly)
Issued by: Reserve Bank of India
Eligible Investors: Individuals (single, joint or minor), HUFs, Charitable Trusts and Universities. However NRIs are NOT eligible to invest.
Face Value of Bond: Rs 1,000
Minimum Investment: 1 bond (Rs 1,000)
Maximum Investment: There is NO maximum limit for investment
Bond Tenure: 7 Years
Investment Options:
Tax: The interest received is added to your income and taxed at your income tax slab rates
TDS: TDS is deducted if the interest income in a year exceeds Rs 10,000.
Also Read: 25 Tax Free Incomes & Investments in India
Transfer: These bonds cannot be transferred from one holder to other
Trading: These bonds cannot be traded
Collateral for Loan: CANNOT be put as collateral to avail loan from any institution
Nomination facility is available
Premature withdrawal:
In case of joint holders or more than two holders of the Bond, the above lock in period will be applicable even if any one of the holders fulfills the above conditions of eligibility.
In case of pre-mature surrender 50% of the interest due and payable for the last six months of the holding period will be recovered as penalty from the investor.
Partial Withdrawal: Not permitted
Where to Buy: You can buy GOI Bonds from Authorized branches of State Bank of India, Associate Banks, Nationalized Banks, a few private sector banks like ICICI, HDFC and Stock Holding Corporation of India Ltd. Offices.
You can read the official Press release on RBI Website.
Also Read: Highest Interest Rate on Bank Fixed Deposits (FD)
Before you look to invest in GOI India Savings (Taxable) Bonds, 2003 you must look at following alternate investments:
1. National Saving Certificate (NSC)
The interest on 5 years National Saving Certificates is 7.6%. The good thing is NSC is also a tax saving instrument u/s 80C.
2. Company Fixed Deposits
Some companies with “AAA” rating like DHFL, Bajaj Finance, KTDFC Ltd., etc are offering interest of more than 7.75% on their fixed deposits.
Also Read: High Rated Companies Offering more than Bank Fixed Deposits
3. NCDs/Bonds listed on Stock exchange
Some examples:
Also Read: Latest NCD open for subscription
The problem is the liquidity for these bonds are low and hence it’s difficult to buy/sell. However you can buy easily when they are issued.
4. Tax Free Bonds listed on Stock Exchanges
PFC, HUDCO, NABARD, IRFC etc had issued tax free bonds in the past and are available on exchanges with yields in the range of 6.3%. The bonds have residual maturity of 10 to 15 years. As the interest received is tax free, these turn out to be better investments for senior citizens in highest tax bracket. The interest payout is annual. Also all the companies are backed by Government of India and also AAA rated – hence safe for investment.
5. Debt & Arbitrage Mutual Funds
More savvy investors can invest in debt or arbitrage mutual funds. the returns are similar to bank fixed deposit but are more tax efficient.
Also Read: All about Arbitrage Mutual Funds
The 7.75% interest in Government of India Savings (Taxable) Bonds, 2018 seems attractive at first in the low interest rate scenario. But we still have better options to invest as stated above and look to invest in them.
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View Comments
Half yly return if I invest 10 Lakhs in GOI bonds at the ROI -7.75%
can foreigners buy these bonds?
How to become agent of RBI 7.75% in Gujarat.
Hello sir, I want to ask I invested in RBI 2003 savings (taxable) Bonds! last year to keep yearly interest just below ₹10000/- s……. Now if again i am investing in newly launched 2018 (taxable) 7.75% bonds will there be ₹10000 limit for me or Not? …….. i.e. will the limit be Rs.10,000/- or Rs.20,000/- (10000 + 10000) Please clarify
It would be Rs 20,000
How can I become agent of 7.75% goi bond. Please can me on 9681111202
Please suggest how to get this TDS certificate
What is the TDS percentage applicable on this bond for individuals and HUF?
10%
Whether TDS shall be calculated on the final year Interest value or cumulative interest value of 6 years ?
TDS is calculated each financial year