CRISIL and CARE, two important Indian rating agencies, have given the NHAI bonds a AAA grade. AAA is the highest credit rating that a major rating agency can give to a bond offering. As a result of the ratings provided by the agencies, these bonds are considered safe to invest in.
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.
Is the interest on NHAI bonds taxed?
“For any due date between March 20 and September 29, the finance ministry has prolonged it to September 30 due to the Covid 19 pandemic,” said Prakash Hegde, a chartered accountant in Bengaluru. For example, if you sold your home on December 15th and your 6-month due date was in mid-June, your payment would be delayed until September 30th. The bond interest is taxed at your slab rate. The bonds have a 5-year lock-in duration.
Is it possible to redeem NHAI bonds before they expire?
*In January 2019, I sold my flat and in July 2019, I invested in NHAI bonds under Section 54EC. Is it possible for me to make a premature withdrawal and purchase a new apartment?
Section 54EC states that if a taxpayer invests his long-term capital gains in certain bonds (such as NHAI bonds), the amount of capital gains is exempt up to a monetary limit of Rs 50 lakh. The amount of capital gains arising from the transfer of original assets that were not charged to tax will be deemed to be the long-term capital gains of the previous year in which specified assets are transferred and will thus be brought to tax.
How do I get my NHAI bonds back?
Payment of redemption proceeds will be made in the name of the First Applicant (in the case of a joint application) / Sole Applicant and in accordance with the bank account information supplied in the application. If the redemption date falls on a holiday or Sunday, the Bonds will be redeemed the next working day.
What exactly are NHAI tax-exempt bonds?
Tax-free bonds are debt instruments that Public Sector Undertakings (PSUs) in India, such as NHAI, NTPC, and REC, have used to raise funds (through Public Offers that came in between FY12 and FY16). These were issued with a 10-, 15-, or 20-year maturity in mind. The interest paid on these bonds is tax-free in the hands of investors, as the name implies, and thus does not increase their overall tax liability.
Such tax-free bonds are currently available at yields of 5.6-5.7 percent, and are an appealing investment option for investors in the 30% or higher income tax bracket, as the pre-tax yield on these bonds will be 8.1-9.8% (depending on the Slab and Surcharge applicable) and thus will be significantly higher than any other debt option currently available in the market, such as bank fixed deposits and RBI Bonds. Because the issuers are government-owned enterprises, the investor also benefits from lesser risk.
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.
Is investing in government bonds risky?
Government bonds have a number of advantages. Government bonds are less risky than other assets like shares since the government guarantees the returns. There are some market dangers, but you can eliminate them by just holding the bonds until they mature.