Floating Rates Saving Bonds, 2020 ( Taxable) are launched having floating interest rate options. The rates will be linked with prevailing National Saving Certificate rate with a spread of +35 bps over the NSC rate.
Salient Features
Eligibility :- Resident Individuals , HUFs. (NRI are not eligible)
Investment : Min: INR 1000, No maximum limit.
Interest Rate : Payable half yearly ( Jan 1st & July 1st ). The Interest rate for next half-year will be reset every six months, the first reset being on January 01, 2021 is fixed at 7.15%. There is no option to pay interest on cumulative basis.
Repayment Tenure : 7 years.
Premature Withdrawal : Premature redemption shall be allowed for specified categories of senior citizens
Income Tax : Interest taxable under IT Act, 1961.
Wealth Tax : The Bonds will be exempt from Wealth-tax under the Wealth- tax Act, 1957.
Transferability/Tradability : The Bonds are not tradeable in the Secondary market and are not eligible as collateral for loans
Nomination : Sole holder can make a nomination
Should you invest ?
Those who want to put money in safe debt avenues and have exhausted all other small saving schemes which provides tax benefits ( i.e. PPF, SSY, SSSC etc. ) can think of investing in these bonds.
Disclaimer : The article is for education purposes only.
