There have been series of Tax free bonds in last two months from likes of HUDCO, IIFCL, REC, PFC and IRFC. REC, IRFC, PFC had come out with its Tranche- II of Tax Free Bonds and now HUDCO (Housing and Urban Development Corporation Limited) too has come out with tranche – II of Tax free bonds which would be open for subscription between February 21 till March 15, 2013.
As for most tax free bonds, these are good for investors in high income tax bracket of 20% and 30%. Today the maximum rate offered by bank fixed deposit is 9%. This translates into a post tax return of 7.2% for 20% tax slab and 6.2% for 30% tax slab. This is lower than HUDCO’s 10-year and 15-year tax free bonds.
Along with the above, it suits investors who want regular income from interest payment and have low risk profile.
Also Read: How investing in Tax free Bonds in your Wife’s name can save tax?
Housing & Urban Development Corporation Ltd. (HUDCO) is a public sector company fully owned by Govt. of India for financing of housing and urban infrastructure activities in India. HUDCO was incorporated on April 25, 1970.
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