- It is planned that the NABARD tax-free bonds be listed on the BSE. This will increase the liquidity available to holders.
- These bonds can also be kept in physical form by investors who do not have a Demat account.
What is the procedure for purchasing NHAI tax-free bonds?
What is the procedure for purchasing NHAI bonds?
- Make a check or demand draft in the name of the “National Highway Authority of India” with the words “Account payee only” struck off.
In India, how can I acquire tax-free government bonds?
The interest income from tax-free bonds is completely tax-free. Furthermore, these bonds are exempt from TDS (tax deducted at source). However, because the principle amount invested in tax-free bonds does not qualify for a tax deduction under Section 80C, it is advisable to record your interest income.
Tax-free bonds are available in both physical and electronic form. When compared to bank FDs, tax-free bonds provide a more tax-efficient return for investors in the higher tax bands.
Because these programs are issued on behalf of the government, the chances of default on principal and interest payments are quite minimal. It also provides financial protection as well as a predictable monthly or annual income. As a result, it is relatively risk-free.
Tax-free bonds cannot be liquidated as quickly as debt mutual funds, for example. Liquidation of tax-free bonds may be difficult due to the fact that government bonds are long-term assets with longer lock-in periods.
The lock-in period for tax-free bonds is longer, ranging from 10 to 20 years. You are unable to withdraw your funds before to the maturity date. As a result, please ensure that you will not want this money soon after investing.
Tax-free bonds can be purchased online or in person using a Demat account. To meet short-term financial goals, you can purchase tax-free bonds on the secondary market.
The return on these bonds is mostly determined by the purchase price. This is due to the fact that they are traded in little quantities with a small number of buyers and sellers.
When considering the tax exemption on interest, the rate of interest offered on tax-free bonds often varies from 5.50 percent to 6.50 percent, which is quite appealing.
The interest is paid to the bondholder once a year. The rates, however, are subject to change because they are linked to the current rate of government securities. If you invest in tax-free bonds at current yields, you may obtain a 6% tax-free return.
How do I purchase tax-free bonds via the internet?
Tax-free bonds include a trading mechanism that allows them to be traded electronically or in person. Investing in such tax-free bonds, on the other hand, is simple and pays off handsomely. When opting for such tax-free bonds, one should keep in mind that the subscription period is only open for a limited time.
To trade tax-free bonds, you must submit your KYC information, which includes your Aadhar card, PAN, passport, and voter ID. Trading is available to you via your Demat account after authentication. As a result, trading tax-free bonds is similar to stock market trading.
Is it possible to buy NHAI bonds online?
These Capital Gain bonds can be purchased directly the NHAI/REC or from registered bond dealers. There is no way to buy these bonds online, so you’ll have to go to their office and fill out a paper form.
In 2021, how do you get an NHAI bond?
The latest primary issuance of tax-free bonds was by the Government of India in 2015, and there have been no additional issues since then.
As a result, investors are practically limited to purchasing these bonds only on the secondary market. As a result, they can be traded on the NSE/BSE.
Any retail investor with a current trading/Demat account can purchase the bond from the exchange like an equity stock, depending on availability.
- When a corporation distributes bonds to the general public, investors can apply online or offline to subscribe.
You’ll need to submit an updated application form, either online or offline, together with the necessary papers and a check or demand draft for the amount you want to invest.
More than 20 nationalized banks can assist you in purchasing these bonds.
You will receive the bond and the Certificate of Holding in your BLA (Bond Ledger Account) once you have invested.
- The stock market is where investors can buy and sell these bonds. However, while the interest on these bonds is tax-free, any capital gain from a secondary market sale is.
Short-term capital gains (STCGs) from the selling of tax-free bonds on exchanges are taxed at the regular rate.
Long-Term Capital Gains (LTCGs) are taxed at a rate of 10% without indexation (i.e. indexation is a mechanism employed by investors to avoid tax loss on investments) or 20% with indexation, whichever is lower.
NHAI or REC: which bond is better?
REC bonds have a somewhat higher rating than NHAI bonds. Because NHAI bondholders must request for surrender of bonds at maturity, which is after 5 years, and only then is the maturity amount redeemed and paid by cheque or ECS. It will be automatically redeemed and paid by check or ECS in the case of REC bonds.
Are RBI bonds taxed?
Interest received from government bonds is taxed in the same way as interest received from bank fixed deposits is taxed. That is, depending on the tax system you have chosen, the interest you receive will be taxed at the income tax rate applicable to your income.