The Government of India’s (GOI) 8% Savings Taxable Bonds issued by Reserved Bank of India (RBI) are available to those seeking safety of principal and guaranteed returns for 6 years as interest rates on bank fixed deposits continue to tumble month after month.

Features of Govt. of India 8% Savings Taxable Bonds

Minimum investment:  Rs.1,000
Maximum Investment: No maximum limit.
Investment Period / Tenure: 6 years from the date of issue
Interest Rate: 8% per annum
Interest Options: Half Yearly Payable Interest and Cumulative Interest
• In Non-Cumulative option: interest would be paid on 1st August and 1st February.
• In Cumulative option: effective yield to maturity will be 10.02%, compounded half yearly. (For Rs.1000 bond value, you receive Rs.1601 at the end of 6 years)
Interest Payment: By ECS / Direct Credit etc. to bank a/c of Bond Holder
Mode of Issue: Bonds are issued in physical mode, so Demat account is not required.
Risk of Investment: 100% Risk Free Investment
Interest income from this bond is taxable
Tax deducted at source (TDS): TDS will be applicable if interest from this instrument earned is more than Rs 5,000 in a financial year.
Eligible Investors: Individuals (single, joint or minor), HUFs, Charitable Trusts and Universities. NRIs are NOT permitted to invest in the GOI Bonds.
Non-transferable and Tradable: The Bonds are issued in the form of credit in the Bond Ledger Account and are NOT transferable and not be tradeable in the secondary market.
Collateral: GOI – RBI bonds are eligible to create pledge, hypothecation, lien or collateral for loans from banks, financial institutions or NBFCs.
Nomination: Facility available to nominate person(s) entitled to receive the payment, in the event of the death of the bondholder
Partial Withdrawal: Not Allowed.
Tax Exemption: No income tax exemption, however, the bonds will be exempt from Wealth-Tax under the Wealth-Tax Act, 1957.

HDFC Bank 8% Savings (Taxable) Bonds 2003 (RBI-GOI) Application Form : Click here

For the smart and well-informed high taxpayers (Investors), debt mutual funds are definitely a much better option for investment.

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