Today Bonds offers investor a number of benefits. There are number of reason why people prefer investment in bonds.
• Interest rate of 8% p.a. Non-cumulative payable half yearly and Cumulative payable on maturity
• Bonds are exempt from Wealth-tax
• Nomination facility is available
• The bonds are issued in an account called Bond Ledger Account (BLA)
• Investment tenure of 6 years
• Low Risk
• No upper limit on investment
• Maturity value shall be Rs.1601/- being the principal and interest for every Rs. 1000/- in the cumulative option
• Transfer of Bond is not permissible
• No tax would be deducted at source from the interest amount
Eligibility for Investment
The Bonds may be held by:
1. An individual, not being a Non-Resident Indian
i. in his or her individual capacity
ii. in individual capacity on joint basis
iii. in individual capacity on anyone or survivor basis
iv. on behalf of a minor as father/mother/legal guardian
v. A Hindu Undivided Family (HUF)
2.
'Charitable Institution' to mean a Company registered under Section 25 of the Indian Companies Act 1956.
. an institution which has obtained a Certificate of Registration as a charitable institution in accordance with a law in force
i. Any institution which has obtained a certificate from Income Tax Authority for the purposes of Section 80G of the Income Tax Act, 1961.
3. "University" means a university established or incorporated by a Central, State or Provincial Act, and includes an institution declared under section 3 of the University Grants Commission Act, 1956 (3 of 1956), to be a university for the purposes of that Act.
Limit of Investment
There will be no maximum limit for investment in these Bonds.
Tax Treatment
• Income-tax: Interest on the Bonds is taxable according to the tax status of the bond holder. However, tax would not be deducted at source from the interest payment.
Wealth tax: The Bonds will be exempt from Wealth-tax.
