GOVERNMENT OF INDIA SAVINGS BONDS:
(1) Government of India 8.0% Savings (Taxable) Bonds : The GOI has recently
introduced this 8% savings (Taxable) bonds. These bonds are convenient for
charitable trusts. It is the best option for investment of surplus funds. There is no
maximum limit for investment in the bonds. 8% interest payable is taxable.
Important Features of 8.0% Savings (Taxable) Bonds:
(a) who can buy: Resident Individuals (Not NRI), Minor, HUF, Charitable Institutions and
Universities.
(b) Interest: 8.0% p.a. payable half yearly or ` 1000 becomes ` 1,601 after 6 years. Half
yearly or Cumulative interest payment options available. Interest is eligible for
deduction u/s 80L (upto Rs 15,000).
(c) Period: 6 years.
(d) Investment: Any amount i.e.: no limit on the amount of investment.
(e) Tax Benefit: Interest is taxable but wealth tax exempted.
(f) Transferability: Bonds are not transferable and pledgable.
(g) No TDS will be deducted on interest.
(h) Nomination facility is available.
The NRIs are not allowed to invest their funds in these savings bonds.
(2) 9.00% GOI Senior Citizens Savings Scheme : It is a special investment scheme
introduced for the benefit of senior citizens. It gives attractive return to senior citizens
and is popular among them.
Important Features of 9.00% GOI Senior Citizens Savings Scheme:
(a) Resident Indians aged 60 years and above can invest in this scheme.
(b) Interest rate is 9% and is payable quarterly.
(c) Period of scheme is 5 years.
(d) Ceiling for maximum permissable deposit per person is 15 lac. .
(e) Account can be opened jointly with spouse only.
(f) No TDS will be deducted but interest is taxable.
(g) Premature withdrawal facility is available after one year.
(h) Nomination facility is available.
(3) Government of India 6.30% Savings (Tax free) Bonds : Recently, the government
has started issuing 6.50% (Tax free) bonds which are reasonably attractive and
secured investment for individuals and institutions.
Important Features of 6.50% Savings (Tax free) Bonds :
(a) Resident individuals (Not NRI), HUF and minor through guardian can invest in
these bonds.
(b) No maximum limit on the amount of investment in these bonds.
(c) Interest 6.50%. Interest payable half yearly or cumulative. Interest payment is
exempted from income tax – No Wealth Tax.
(d) Maturity period is of five years.
(e) Pledge and transfer are not allowed. However, the bonds can be transferable
only by way of gifts.
(f) Cumulative facility available. 1000 becomes 1,377 after five years.
(g) Non-cumulative facility is also available. This means 6.5% interest p.a. (payable
half yearly). This 6.50% tax free interest is equal to 9.28 p.a. taxable (for 30.0%
tax payer).
(h) Redemption (premature encashment) is allowed after 3 years only.
(i) Nomination facility is available.
It may be noted that 6.50% savings bonds offers more benefits/ concessions as compared
to 8% savings (taxable) bonds. Both the bonds are popular and used extensively as a safe
and secured investment avenue by large number of rich investors.
Both the avenues are not available to NRIs. The new Savings Bonds of GOT are similar to
Relief Bonds which RBI was issuing previously on behalf of the Government Of India. RBI
Relief Bonds are discontinued till further notice. The application for both categories of
bonds may be submitted to SBI or HDFC Bank. They issue bond certificates of GOI.
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