The Centre on Thursday announced the introduction of 7.75% savings bonds designed to help citizens invest in a taxable instrument, without any monetary ceiling.
The instruments would be available for sale from January 10, 2018.
The bonds are open to investment by individuals, including joint holdings and Hindu Undivided Families (HUFs). Non-resident Indians are not eligible to invest in these bonds.
The bonds will be issued at par, that is, at ₹100 and would be issued for a minimum amount of and in multiples of ₹1,000.
“The bonds will be on tap till further notice and issued in cumulative and non-cumulative forms,” according to a statement from the Centre. “There will be no maximum limit for investment in the bonds. 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.”
Wealth tax exempt
The bonds will, however, be exempt from wealth tax under the Wealth Tax Act, 1957. “The bonds will have a maturity of seven years carrying interest at 7.75% per annum payable half-yearly,” according to the statement. “The cumulative value of ₹1,000 at the end of seven years will be Rs 1,703. The bonds are not transferable,” it said. “The bonds are not tradeable in the secondary market and are not eligible as collateral for loans from banking institutions, non-banking financial companies or financial institutions.”
