GOI launches 7.75% Savings (Taxable) Bonds, 2018

The Government of India has launched 7.75% Savings (Taxable) Bonds, 2018 scheme to enable resident citizens/HUF to invest in a taxable bond, without any monetary ceiling. This new saving scheme will commenced on 10th January 2018.
Earlier, the finance ministry said that the subscription of 8% government savings (taxable) bonds 2003, will be closed with effect from 2nd January 2018.

The government had started the 8% government savings (taxable) bonds in 2003 to persuade retail investors to invest.
The bond had 6 years of fixed tenure and there was no upper limit for investment.
The decision to discontinue the bond taken in the backdrop of declining interest rate in other saving instruments, especially the Post Office small saving schemes.

Key facts of Bonds

1. All the resident citizens, individuals (including Joint Holdings) and Hindu Undivided Families HUF) are eligible to invest in this bond. NRIs are not eligible for making investments in these bonds. It will be exempted from Wealth-tax.
2. However, interest on the Bonds will be taxable under the IT Act, 1961 as applicable according to the relevant tax status of the bondholder.
3. The Bonds will be issued at par i.e. at Rs.100.00. It will be issued for a minimum amount of Rs.1,000/- (face value) and in the multiples of it. There will be no maximum limit for investment in the Bonds.
4. The Bonds will have a maturity of 7 years carrying interest at 7.75% per annum. The interest will be payable at half- yearly. The bonds cannot be transferred and hence not transferable.
5. The bonds are not eligible as collateral for loans from banking institutions, NBFCs and FIs.

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