Investment option for debt investors: A look at new instrument for Indians

The 7.75% savings (taxable) bonds willl be launched on January 10. A closer look at the new investment instrument available for Indian citizens.

WHO CAN INVEST 

* Open to investment by individuals (including joint holdings) and Hindu undivided families

* NRIs are not eligible to invest in these bonds 

 SUBSCRIPTION 

* Applications for the bonds will be in the form of Bond Ledger Account 

* Will be received in the designated branches of agency banks and SHCIL  

 PERIOD 

* Will be on tap till further notice  and issued in cumulative and non-cumulative forms

 ISSUE PRICE 

* To be issued at par that is at Rs 100 

* Will be issued for a minimum amount of Rs 1,000 (face value) and in multiples thereof 

* Will be issued in demat form (Bond Ledger Account) only

 LIMIT OF INVESTMENT

* No maximum limit for investment in the bonds

 TRANSFERABILITY

* Not transferable 

* Not tradeable in the secondary market 

* Not eligible as collateral for loans from banking institutions, non-banking financial companies or financial institutions

 NOMINATION

* A sole holder or a sole surviving holder of a bond, being an individual, can make a nomination

 MATURITY AND RATE OF INTEREST

 

* Will have a maturity of 7 years carrying interest at 7.75% per annum payable half-yearly 

 TAX TREATMENT 

* Income tax: Interest on the bonds will be taxable under the Income-tax Act, 1961 as applicable according to the relevant tax status of the bond holder