Government of India had introduced 8% Savings Taxable Bond

(IN 2003 vie their notification No. F.4 (10)-W&M/2003 dated March 21, 2003. Please find below summary of 8%  SAVINGS  TAXABLE  BONDS’ 2003)

Government of india taxable bond

Government of India Taxable Bond Details:

Who Can Invest? Individual, HUF, University & Charitable Trust
Minimum/Maximum Investment Rs.1000/-& in multiples thereof, No upper limit.
Period of investments 6 years
Interest payable Non Cumulative, payable Half Yearly – on 1st February & 1st August. In case of Cumulative option, interest payable on maturity, Rs. 1601 per Rs. 1000.
Tax Benefit Wealth Tax is exempted. Income Tax will be deducted at source while interest is paid.
Forms of Bonds Bond Ledger Account (BAL).
Date of Issue of Bonds Date of receipt of subscription in Cash or date of realization of cheque/draft.
Bank Mandate It is mandatory for the investors to provide Bank account details to facilitate payment of interest/maturity value.
Nomination Facility Available – can nominate one or more person as nominee. NRI can be also nominated. However, remittance of the interest/maturity proceeds will be subject to Foreign Exchange regulations prevailing at the time of remittance. Minor also can be nominated.
Transfer ability The Bonds are not tradable/transferable. However, the Bonds shall be eligible as collateral for loans, to create pledge, hyphenation or lien in favor of scheduled bank for loans against the security of the bonds.
Option of schemes Non cumulative/ Cumulative. Change of option is not permitted.

Documents Required For Government of India Taxable Bond

For Individual For HUF
a) PAN copy (a) PAN copy of HUF
(b) Address Proof (all the holders) (b) Address Proof – Bank statement
(c) Cancelled Cheque. (c) PAN copy & Address proof
  1. Limit of Investment There will be no maximum limit for investment in these Bonds.
  2. Nomination A sole holder or a sole surviving holder of a Bond, being an individual, may nominate one or more persons who shall be entitled to the Bond and the payment thereon in the event of his/her death.
  3. Advances/Trad ability against Bonds The Bonds shall NOT be tradable in the secondary market and cannot be offered as collateral for loans from banks, financial Institutions and Non Banking Financial Companies, (NBFC) etc.
  4. Transfer-ability The Bond in the form of Bond Ledger Account shall NOT be transferable.
  5. Tax Treatment Interest income from the Bonds is taxable. TDS is deducted at the time of interest payment as per the prevailing IT Rules.

Interest payable in Government of India Taxable Bond

  • The bond will be issued in cumulative and non-cumulative form, at the option of the investor.
  • The bond will bear interest at the rate of 8% per annum. Interest to the holders opting for non-cumulative Bonds will be paid from date of issue up to 31st July/31st January, as the case may be and thereafter at half-yearly for period ending 31st July/31st January on 1st August and 1st February.
  • Interest on cumulative bonds will be compounded with half-yearly rests and will be payable on maturity along with the principal. The maturity value of the Bonds shall be Rs.1601/- (being principal and interest) for every Rs.1,000/-(Nominal). Interest on Bond in the form of “Bond Ledger Account” will be paid, by cheque / warrant or through ECS credit to bank account of the holder as per the option exercised by the investor/holder.

Repayment Option

  • The Bonds shall be repayable on the expiry of 6 (Six) years from the date of issue.
  • No interest would accrue after the maturity of the bond.

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