{"id":7747,"date":"2018-01-05T01:22:24","date_gmt":"2018-01-04T19:52:24","guid":{"rendered":"http:\/\/www.apnaplan.com\/?p=7747"},"modified":"2019-02-15T10:50:14","modified_gmt":"2019-02-15T05:20:14","slug":"government-savings-bonds-invest","status":"publish","type":"post","link":"https:\/\/www.apnaplan.com\/government-savings-bonds-invest\/","title":{"rendered":"7.75% Government of India Savings (Taxable) Bonds 2018 \u2013 Should you Invest?"},"content":{"rendered":"

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<\/strong>. We look at the salient features of these GOI bond so that you can decide if it\u2019s right investment for you!<\/p>\n

Salient Features: 7.75% GOI Savings (Taxable) Bonds 2018<\/h2>\n

Interest Offered:<\/strong>\u00a07.75% (compounded\/payable half-yearly)<\/p>\n

Issued by:<\/strong> Reserve Bank of India<\/p>\n

Eligible Investors:<\/strong> Individuals (single, joint or minor), HUFs, Charitable Trusts and Universities. However NRIs are NOT eligible to invest.<\/strong><\/p>\n

Face Value of Bond:<\/strong> Rs 1,000<\/p>\n

Minimum Investment:<\/strong> 1 bond (Rs 1,000)<\/p>\n

Maximum Investment:<\/strong> There is NO maximum limit for investment<\/p>\n

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Also Read:<\/strong>13 Investments to Generate Regular Income<\/a><\/p>\n<\/blockquote>\n

Bond Tenure:<\/strong> 7 Years<\/p>\n

Investment Options:<\/strong><\/p>\n

    \n
  1. Cumulative<\/strong> \u2013 You receive Rs 1,703 at the end of 7 years on maturity for every Rs 1,000 invested<\/li>\n
  2. Non-cumulative<\/strong> \u2013 Interest paid on August 1 and February 1 every year<\/li>\n<\/ol>\n

    Tax:<\/strong> The interest received is added to your income and taxed at your income tax slab rates<\/p>\n

    TDS:<\/strong> TDS is deducted if the interest income in a year exceeds Rs 10,000.<\/p>\n

    \n

    Also Read:<\/strong>\u00a025 Tax Free Incomes & Investments in India<\/a><\/p>\n<\/blockquote>\n

    Transfer:<\/strong> These bonds cannot be transferred from one holder to other<\/p>\n

    Trading:<\/strong> These bonds cannot be traded<\/p>\n

    Collateral for Loan:<\/strong> CANNOT be put as collateral to avail loan from any institution<\/p>\n

    Nomination<\/strong> facility is available<\/p>\n

    Premature withdrawal:<\/strong><\/p>\n

      \n
    1. Lock in period for investors in the age bracket of 60 to 70 years shall be 6 years from the date of issue<\/li>\n
    2. Lock in period for investors in the age bracket of 70 to 80 years shall be 5 years from the date of issue<\/li>\n
    3. Lock in period for investors of the age of 80 years and above shall be 4 years from the date of issue<\/li>\n<\/ol>\n

      In case of joint holders or more than two holders of the Bond, the above lock\u00a0in period will be applicable even if any one of the holders fulfills the above\u00a0conditions of eligibility<\/strong>.<\/p>\n

      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.<\/p>\n

      Partial Withdrawal:<\/strong> Not permitted<\/p>\n

      Where to Buy:<\/strong> 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.<\/p>\n

      You can read the official Press release on RBI Website<\/a>.<\/strong><\/p>\n

      Why you should Invest?<\/h2>\n
        \n
      1. 7.75% interest is higher than most banks are offering today.<\/li>\n
      2. As the bonds are issued by RBI, there is NO credit risk and fully safe.<\/li>\n<\/ol>\n

        Also Read:\u00a0<\/strong>Highest Interest Rate on Bank Fixed Deposits (FD)<\/a><\/p><\/blockquote>\n

        Why you should NOT Invest?<\/h2>\n
          \n
        1. In most cases you cannot exit or sell the bond<\/strong> until maturity<\/li>\n
        2. All documentation related to purchase, pledge or transfer at death of the holder etc. has to be done physically. There is no online facility<\/strong> available making it highly inconvenient.<\/li>\n
        3. The 7.75%\u00a0interest is taxable<\/strong> and post-tax returns for 30% tax bracket would be just 5.36%<\/li>\n
        4. Senior citizens should stay away as they can get 8.3% in senior citizens saving scheme<\/a><\/strong> with less hassles.<\/li>\n<\/ol>\n
          \"Government
          Government of India Savings Taxable Bonds 2018<\/strong><\/figcaption><\/figure>\n

          Alternate Investments?<\/h2>\n

          Before you look to invest in GOI India Savings (Taxable) Bonds, 2003 you must look at following alternate investments:<\/p>\n

          1. National Saving Certificate (NSC)<\/strong><\/span><\/p>\n

          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.<\/p>\n

          2. Company Fixed Deposits<\/span><\/strong><\/p>\n

          Some companies with \u201cAAA\u201d rating like DHFL, Bajaj Finance, KTDFC Ltd., etc are offering interest of more than 7.75% on their fixed deposits.<\/p>\n

          \n

          Also Read:<\/strong>\u00a0High Rated Companies Offering more than Bank Fixed Deposits\u00a0<\/a><\/p>\n<\/blockquote>\n

          3. NCDs\/Bonds listed on Stock exchange<\/strong><\/span><\/p>\n

          Some examples:<\/p>\n