IREDA (Indian Renewable Energy Development Agency Ltd), a Government of India NBFC is issuing its Tax Free Bond. It would offer coupon rate up to 7.74% for retail investors depending on tenure. You can choose between tenure of 10, 15 and 20 Years. The bond issue would be open for subscription for January 8 to 22, 2016.
IREDA is Public Limited Government Company established as a Non-Banking Financial Institution and is responsible to promote, develop and extend financial assistance for renewable energy and energy efficiency /conservation projects.
Also Read: PPF – A Must Have Investment
The IREDA Tax Free Bond offers the following interest rates. The interest would be paid every year.
The table also shows the effective interest rate for different tax slabs. For e.g. To earn post tax 7.74% interest on deposit a person in 30% tax bracket should actually get pre tax return of 11.20%.
Tax Free Bonds are suited for people in the tax bracket of 20% or higher who are looking for regular and safe income. In case you do not want regular income you should first exhaust your Rs 1.5 lakhs PPF limit where the returns are 8.7% and tax free. Salaried employees should opt for VPF before looking at tax free bonds. Both the above options have higher returns, tax free and partial exit options after 5/6 years.
Also Read: What is the Maximum Income Tax You can Save for FY 2015-16?
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The bonds can be issued both in physical and demat form. For applying through Demat Account, go to the IPO/NCD/Bonds offer tab of your Demat account and fill out relevant details.
You can also download the Physical Form and follow the instructions.
IREDA Tax Free Bonds 2016 suits investors who are looking for safe, regular income and are in the higher tax bracket. A few more PSUs are going to issue tax free bonds in coming days. The interest rate is expected to go marginally downward.
NTPC/PFC/REC/IRFC/NHAI Tax Free Bond were over-subscribed before the formal closing date, so if you want to subscribe these bonds, invest early as these would be grabbed very soon and may close for subscription if it gets fully subscribed before closure date.
IREDA Tax Free Bonds were subscribed almost 3 times on the first day itself. The retail portion was subscribed 1.84 times, while the HNI portion received bids for 2.04 times the part set aside for them.
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