NHAI (National Highways Authority Of India), a Government of India company is issuing its Tranche II of Tax Free Bond. It would offer coupon rate up to 7.69% 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 February 24 to March 1, 2016.
NHAI is autonomous agency of Government of India and is responsible for the development, maintenance and management of National Highways entrusted to it and for matters connected or incidental thereto.
Also Read: PPF – A Must Have Investment
The NHAI 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 7.69% interest on deposit a person in 30% tax bracket should actually get pre tax return of 11.13%.
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?
Also Read: Highest Interest Rate on Recurring Deposits [comparing 41 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.
NHAI 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.
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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Those who are into higher tax bracket this is a suitable option for asset diversification.. And as Indian economy is a down trained interest rate 7.69 tax free interest rate is very attractive.