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HDFC BANK - 8.05% RBI Floating Rate Savings Bonds 2020 ( Taxable)

The government has announced the launch of Floating Rate Savings Bonds, 2020 (Taxable) with an interest rate of 8.05 percent. The bonds will be available for subscription from July 1st, 2023 to 31st December 2023. As per the Reserve Bank of India (RBI) press release, the interest rate on these bonds will be reset every six months. There is no option to pay interest on a cumulative basis i.e. interest will be payable in every six months instead of having an option to receive it at maturity.

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Why choose this product?

Minimum investment of Rs.1,000

No maximum limit on investment

Floating rate of interest with a Half Yearly interest payout

100% risk free investment option

7 years tenure of the bond from the date of issue with a special provision for premature redemption for Senior Citizens.

Who can invest in it?

An Individual, not being a Non-Resident Indian

A Hindu Undivided Family

Eligibility ?You can apply for the Floating Rate Savings Bonds 2020 (Taxable) if you are:

A person residing in India

In his or her individual capacity, or

In individual capacity on joint basis, or

In individual capacity on anyone or survivor basis, or

On behalf of a minor as father/mother/legal guardian

A Hindu Undivided Family

FAQ

No, these bonds are not transferable.

The Bonds will be issued for a minimum amount of Rs. 1000/- (face value) and in multiples thereof. There will be no maximum limit for investment in Bonds.

The tenure of the bond is 7 years from the date of issue. No interest will accrue after the maturity of the bond. The bonds shall be repayable on the expiration of seven years from the date of issue. Premature redemption shall be allowed for specified categories of senior citizens. This is similar to the earlier withdrawn 7.75% RBI Taxable Bonds.

Yes, a nomination facility is available.

The interest income from the bonds is taxable. TDS (This stands for Tax Deducted at Source, which means the tax you have to pay on your salary is already deducted and the net amount is received by you.) is deducted at the time of interest payment as per the prevailing IT rules.

The Bonds will be issued for a minimum amount of Rs. 1000/- (face value) and in multiples thereof.

The tenure of the bond is 7 years from the date of issue. No interest will accrue after the maturity of the bond. Premature redemption facility is allowed for investors in the age group of 60 years and above as per RBI’s Notification.

Interest is payable semi-annually from the date of issue of bonds, up to 30th June / 31st December as the case may be, and thereafter half-yearly for period ending 30th June and 31st December on 1st July and 1st January respectively.

The interest rate of the bond, would be re-set half yearly starting with Jan 1st, 2021 and thereafter every July 1st and will be linked with the prevailing National Saving Certificate (NSC) rate with a spread of (+) 35 bps over the respective NSC rate. Accordingly, the coupon rate on FRSB 2020 (T) for period July 1,2023 to December 31, 2023 and payable on January 1,2024 has been reset at 8.05% (7.7% +0.35% =8.05%). All subsequent coupon rate would be based on the fixation of rate of interest on NSC on Jan 01 and July 01, following the above methodology

Capital gain tax exemption bonds (U/S 54EC):- FY2023- 2024

(Avail Tax benefit U/s 54EC of Income-tax Act)

Capital Gain Bonds are being issued as ‘Long term specified assets’ within the meaning of Sub-Section 54-EC of the Income Tax Act, 1961. Those desirous of availing exemption from capital gains tax under Section 54 EC may invest in these bonds. Capital Gains arising from the transfer of Long-term capital assets can be invested in these bonds within a period of six months from the date of transfer of the asset for getting exemption from the capital gains tax.

Provisions of section 54EC

As per provisions of Income Tax Act, 1961, any long term capital gains arising from the transfer of any capital asset would be exempt from tax under section 54EC of the Act if:

  • To avail of capital gain exemption, the bonds so acquired cannot be transferred or converted into money or any loan or advance can be taken on security of such bond within 5 years from the date of acquisition else, the benefit would be withdrawn

  • If the amount invested in bonds is less than the capital gains realized, only proportionate capital gains would be exempt from tax

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PFC (Power Finance Corporation Limited)

REC ( Rural Electrification Corporation Ltd)

NHAI ( National Highway Authority Of India) – Discontinuation of NHAI 54 EC Bonds with immediate effect 3rd September 2022..

IRFC (Indian Railway Finance Corporation Ltd)

FEATURES – FY 2023-2024

Features IRFC(Indian Railway Finance Corporation Ltd.) Series VII PFC (Power Finance Corporation Ltd) Series VII REC (Rural Electrification Corporation Ltd) Series XVII
Rating ‘AAA/Stable’ by CRISIL, ‘AAA (Stable)’ by ICRA, & ‘AAA/Stable’ by CARE ‘AAA/Stable’ by CRISIL, ‘AAA (Stable)’ by ICRA, & ‘AAA/Stable’ by CARE ‘ICRA AAA’ by ICRA Limited. ‘CARE AAA’ by Care Ratings Limited. ‘CRISIL AAA’ by CRISIL Limited. ‘IND AAA’ by India Ratings and Research Private Limited.
Coupon / Interest Rate/Yield 5.25% p.a 5.25% p.a 5.25% p.a
Tax Status Taxable Taxable Taxable
Tax Benefit SEC 54 EC SEC 54 EC SEC 54 EC
Minimum (Rs.) 20,000 20,000 20,000
Maximum (Rs.) 50 Lacs 50 Lacs 50 Lacs
Tenure 5 Years 5 Years 5 Years
Mode of Interest Annual Annual Annual