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What is a Savings Bond?

Savings Bond

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 IncomeTax

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.
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  1. Savings is part of everyone’s life, if you are interested in savings bond as said in the above article, there are numerous types of savings bonds. You can choose according the right one according to your income and benefits. These kinds of savings may help you and family in the future during critical financial needs.

  2. Savings bonds – such as tax, retail, infrastructure, retail, national and purchase – are debt securities issued by the government to help pay for their own borrowing needs. They are one of the safest investments for all of us, because they are backed by the credit of the government. Investment in savings bonds just depends which type most suits you and your lifestyle.


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