BONDS

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Investment Bonds are debt instruments in which the authorized issuer owes the bond holders a debt. Depending on the terms of the type of bonds, the authorized issuer is obliged to pay interest and/or repay the principal at a later date upon maturity. In simpler terms, a bond is a formal contract to repay borrowed money with an interest at fixed intervals. Investment bonds are a way to raise money. When you purchase any type of bond (government, convertible, callable, etc.), you are lending money to the issuer which may be a corporation, the government, a federal agency or any other entity. In return, the issuer promises to pay a specified rate of interest during the life of the bond. The issuer also repays the face value of the bond when upon maturity of the term.

Learn about different types of bonds and find suggestions for best bonds to invest in!

 

Some useful features:

 

  1. interactive connection ZERO-COUPON BONDS

     These investment bonds are issued at a discount, but redeemed at the principal amount.

  2.  
  3. interactive connection G-SEC BONDS

     These are issued by the government and are one of the safest types of bonds to invest in.

  4.  
  5. interactive connection CORPORATE BONDS

     These types of bonds are simple bonds, wherein a company borrows and pays interest at regular intervals.

  6.  
  7. interactive connection INFLATION-LINKED BONDS

     In these types of bonds, principal amount and interest payments are indexed to inflation.

  8.  
  9. interactive connection CONVERTIBLE BONDS

     The bond holder has the option to convert these types of bond into equity on pre-specified terms.

  10.  
  11. interactive connection Sovereign Gold Bond

     Sovereign Gold Bonds are the safest way to buy digital Gold, as they are issued by Govt. of India.

  12.  
  13. interactive connection RBI Bond

    The Government of India decided to issue 7.75% Savings (Taxable) Bonds, 2018 with effect from January 10, 2018 to enable resident citizens/HUF to invest in a taxable bond, without any monetary ceiling.

 

The salient features of the Bond : The Bonds may be held by –

 

An individual, not being a Non-Resident Indian (NRI)

  • In his or her individual capacity, or
  • In an individual capacity on joint basis, or
  • In an individual capacity on anyone or survivor basis, or
  • On behalf of a minor as father/mother/legal guardian

 

Limit of Investment: There is no maximum limit for investment in the Bonds.

 

Tax Treatment: Interest on the Bonds will be taxable under the Income-Tax Act, 1961 as applicable according to the relevant tax status of the bond holder.

 

Issue Price

 

  • The Bonds will be issued at par i.e. at Rs.100.00 percent.
  • The Bonds will be issued for a minimum amount of Rs. 1000/- (face value) and in multiples thereof. Accordingly, the issue price will be Rs.1000/- for every Rs.1,000/-(Nominal).

 

54EC Bonds

54EC bonds, or capital gains bonds, are one of the best way to save long-term capital gain tax. 54EC bonds are specifically meant for investors earning long-term capital gains and would like tax exemption on these gains. Tax deduction is available under section 54EC of the Income Tax Act. 54EC bonds do not allow any tax exemption on short-term capital gains tax. Invest in 54EC bonds to get benefits of tax deduction. The maximum limit for investing in 54EC bonds is Rs. 50,00,000. The eligible bonds under Section 54EC are REC (Rural Electrification Corporation Ltd), PFC (Power Finance Corporation Ltd) and NHAI (National Highways Authority of India) and IRFC (Indian Railways Finance Corporation Limited).