NABARD (National Bank for Agriculture and Rural Development), a Government of India company is issuing its Tax Free Bond. It would offer coupon rate up to 7.64% for retail investors depending on tenure. You can choose between tenure of 10 and 15 Years. The bond issue would be open for subscription for March 9 to 16, 2016.
NABARD is an apex development bank owned by Government of India and is responsible for upliftment of rural India by increasing the credit flow for elevation of agriculture & rural non farm sector.
Also Read: PPF – A Must Have Investment
The NABARD 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 7.64% interest on deposit a person in 30% tax bracket should actually get pre tax return of 11.06%.
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.
Also Read: What is the Maximum Income Tax You can Save for FY 2015-16?
Also Read: Highest Interest Rate on Bank Fixed Deposits [comparing 44 banks]
The bonds can be issued both in physical and demat form.
You can apply online through ASBA or download the Physical Form from the Edelweiss Financial Services and follow the instructions.
NABARD Tax Free Bonds 2016 suits investors who are looking for safe, regular income and are in the higher tax bracket. This is second last offering for this financial year followed by IRFC in coming days. There might not be any Tax free bonds issue next financial year.
Previous 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.
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