Savings Bond
Savings Bond are issued by the Central Government and are of variable interest rates. The fund collected out of the issuance is utilized by the Central Government for its investment in various sectors. The Bonds are non-transferable, except for close relatives by way of gift, as per the Indian Companies Act. Facility of nomination is available for savings bonds. Some of the bonds can be offered as collaterals for availing loans, but they can’t be traded in the secondary market.
Types of Savings Bond:
Following are the types of Savings Bond available for investing in India:
- Tax Savings Bond
- Retail Savings Bond
- National Savings Bond
- Purchase Savings Bond
- Infrastructure Bond
Tax considerations:
Tax exemptions and Tax Savings on Savings Bonds are listed below :
- The interest earned out of investing in Tax Free Bonds are exempted from Income Tax under Section 10 (15)(iv)(h) of the Income Tax
- The investment (upto Rs.1.5 lacs) in Tax Savings Bonds qualifies for savings under Section 80C of Income Tax Act.
- Investments in Infrastructure Bonds (upto Rs. 20,000/-) qualifies for exemption of income tax under Section 80 CCF of the Income-Tax
Advantages of Savings Bonds:
Listed below are the advantages of Savings-Bond
- Safe avenue for parking your savings
- An investment which is lucrative from taxation point of view.
- They can be easily purchased.
