Tax Saving Bonds to Invest in India

Tax-free bonds are India’s best tax-free options for revenue. Many of these bonds have seen premiums increase above and above their initial offer level, with interest rates dropping in the economy as a whole. You can also find out about bonds by using tax saving bonds calculator. Nonetheless, the largest tax bracket also provides decent yields for individuals. Let’s take a peek.

What are Tax Saving Bonds?

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In simple terms, a bond is a contract that offers certain incentives and benefits to the holder in exchange for an investment. It consists of an Issuer, the entity providing such bonds, and an owner, the person in whose name there are these bonds. Tax Saving Bonds as the name suggests are bonds that help people save taxes. Such bonds give property owners some special tax incentives, helping them save a small percentage of their total tax. Individuals can purchase and receive a certain interest on these bonds, with a special clause of the Income Tax Act offering tax benefits on investments. Tax Saving Bonds come with a fixed lock-in duration of 5 years, making them vehicles for investment in the medium to long term.

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Though not as attractive as other investment options, tax savings bonds deliver respectable returns without the risk commonly associated with other instruments, making them suitable for members of society who want to save money without losing it. Individuals looking for long-term, rather than immediate, returns should opt for tax-saving bonds.

List of Saving Bonds to Invest in India:

Tax-free-bonds

1.HUDCO N3 Bonds

The Hudco N3 bonds are nearly identical, but they only offer an 8.1 percent coupon rate.

Currently, the bonds are priced at Rs 1200 and the next interest payment date is March 5th, 2019. It is important to remember that tax-free bonds are thinly traded, and in large amounts, you can not buy and sell. The discovery of prices may not be the best around, too. So, you need to differentiate a little when shopping for the extension.

Profit from the HUDCO N3 Bonds is tax-free in the investors’ pockets. At the current market level, the post-tax yields work to around 7.1 percent.

You can check about this bond using the savings bond calculator.

  1. National Highways Authority Of India

The Indian National Highways Authority (NHAI) bonds give a coupon rate of 8.2 percent, and like all companies, they are owned by the government and therefore very stable.

The bonds on the NSE are priced at Rs 1 080. These bonds have a coupon rate of 8.2 percent. The next interest payment will be Oct 1, 2019, for those bonds. The bonds are rated AAA and there are no concerns about defaults because it is an entity owned by the government.

  1. Indian Railways N7 Series

The tax-free bonds of the Indian Railways N7 series give an interest rate of 8.23 percent. Yet again, a higher offer of discounts compared with most tax-free bonds. The bonds are currently on the National Stock Exchange, priced at Rs 1,140. The next payment of interest on these bonds is only in April 2019. Use the savings bond calculator to know more about the pricing.

  1. Indian Railways Finance Corporation N1 Series

Indian Railways Finance Corporation gets an 8 percent interest rate on its tax-free bonds. The bonds issued at 1000 rs are currently trading at 1063 rs.

The next due date for interest on certain bonds is Oct 15, 2019.

The yields are only the best for those with the highest tax bracket.

  1. REC N7 series

A few years ago the Rural Electrification Corporation provided the N7series. Investors can purchase certain tax-free bonds listed on the NSE at a price of Rs 1,243.

Each year the date of interest payment is September. The bond redemption is set to take place in Sep 2018. The REC Tax-Free Bonds are AAA rated and therefore are very secure.

Read More – How to Save Income Tax in India

What are the savings bond calculator?

Savings bond calculator. You can find out if your savings bonds are worth with savings bond calculator. The savings bond calculator will save the EE, Series E, and Series I bonds, as well as the Savings Notes. Features include the current interest rate, the next date of accrual, the final date of maturity, and the interest earned year to date.

Conclusion

If you’re trying to invest your funds in a sanctuary, here’s good news for you: invest in tax-free bonds, and gain interest on your funds every year. More good news; the interest paid on your bond is absolutely tax-free.

In India, tax-free bond protection is provided by a company, financial institution, or government. Thus these bonds are a secure choice for investment.

Before maturity, you can also sell the bonds at market price, as they are listed on the Bombay and National stock exchanges.