Tax-Free Bonds are said to be one of the best options to make investments with low risk and HNIs (High Net worth Individuals). Lastly, in 2013, the government of India (UPA Govt) has introduced Tax-free bonds now (which was appreciated by all), this year Modi government also going to introduce Rs. 40,000 cr of Tax-free Bonds. Below is a list of Tax-Free Bonds In India which are going to launch Soon.
List of Tax-Free Bonds in India 2022
Now, many of you come to know about Tax-Free Bonds for the first time, Let me give you lumpsum idea of Tax-free bond which may help you to understand the concept.
In Bonds, the interest rate and income are fixed at some percentage rate. This means you will get a return on the predefined amount with a pre-calculated interest rate, but unlike other bonds, Tax-Free Bonds are exempt from taxation u/s 10 of the Income Tax Act, 1961.
The Tax-Free Bonds were first introduced by UPA Government in 2011-12 which was of Amount Rs.30,000cr, later in 2012-13 Rs.60,000cr were collected by tax-free bonds, Rs.50,000cr were collected in the year 2013-14. In the last financial year, there were no Tax-free bonds and this year again it is going to launch.
How much do we return get (interest rate) in tax-free bonds?
Well, For that they have predefined ratings of companies who introducing these bonds. but at approx, one can earn interest rate ranging from 7.3% p.a. to 7.5% p.a on the amount he/she invested in Tax-free bonds.
In the below image, you will understand the Tax-Free Bonds Interest Rate, with ratings of AAA, AA+, AA or AA-.
RII = Retail Individuals Investors, Qualified Institutional Buyers (QIBs), High Networth Individuals (HNIs).
FAQs Related to Investment in Tax-Free Bonds;
1. Can NRI be Eligible to invest in Tax-free bonds?
Yes, they can. Just Subscribe to any choice of your bonds and you will get a return annually.
2. What is the Tenure of Tax-Free Bonds?
Mostly, Bonds have a tenure of 10-15-20 years. Still, it depends on the issuer.
3. How I will get paid for the Interest rate of Bonds?
You will get paid your interest rate directly to your bank account with which you have bought the Bonds.
4. Do I get a Deduction of Invested amount u/s 80C?
No, Not at all, you will get a Deduction of the “Interest Amount” that you will receive via Tax-Free Bonds.
5. Can I sell or buy tax-free bonds from someone else?
Yes, you can. It is another market where people do sell or buy their Tax-free bonds. Remember, you need to pay tax if you sell your bonds within 12 months (on the amount you gained) and if you exceed the period of 12 months and then you sell, you have to Pay 10 % (flat) tax on the amount you gained.
6. How to buy Tax-free bonds?
Quite simply, you can buy it physically or via Demat format when the bonds are announced. You need to show your Permanent Account Number (PAN Card No) at the time of buying Tax-free bonds.
Else you can buy from someone who already has bonds and looking to sell.
7. Is there any Eligibility Criteria to buy Tax free Bonds?
No, Any Individual can buy or invest in Tax-free bonds. Retail Individual Investors (RIIs), High Net-worth Individuals (HNIs), NRIs (Non-Resident Indians)can invest in Tax-free Bonds.
Should We really invest in Tax-free bonds??
well, the only shortcomings of Tax-Free Bonds are the lock-in period. Yes, They have a long lock-in period of 10-20 years. Mostly The people who came into the tax range of 30% invest in such bonds as they can easily wait for 10-20 years.
Small investors still prefer PPF or Fixed Deposit over Tax-free bonds, with due respect to return on the amount invested.
If you have any questions or queries, you can shoot me via comment below 🙂
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