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Bonds
 
Taxable 8% Savings Bonds, 2003 are issued by Government of India with effect from 21st April 2003 in terms of their Notification No. F.4(10)-W&M/2003 dated 21st March 2003.
 
 
 
 
 
 
 
 
 
 
 
 
 
Features of the 8% (Taxable) Bonds
 
  • The bonds are exempt from Wealth-tax
  • Interest rate of 8% p.a. Non-cumulative payable half yearly and Cumulative payable on maturity
  • Nomination facility is available
  • The bonds are issued in an account called Bond Ledger Account (BLA)
  • Investment tenure of 6 years
  • Low Risk
  • No upper limit on investment
  • Maturity value shall be Rs.1601/- being the principal and interest for every Rs. 1000/- in the cumulative option
  • Transfer of Bond is not permissible
  • No tax would be deducted at source from the interest amount
 
Eligibility for Investment
 
The Bonds may be held by
 
  An individual, not being a Non-Resident Indian
 
  • in his or her individual capacity
  • in individual capacity on joint basis
  • in individual capacity on anyone or survivor basis
  • on behalf of a minor as father/mother/legal guardian
 
  A Hindu Undivided Family (HUF)
 
'Charitable Institution' to mean a Company registered under Section 25 of the Indian Companies Act 1956
 
  • an institution which has obtained a Certificate of Registration as a charitable institution in accordance with a law in force
  • any institution which has obtained a certificate from Income Tax Authority for the purposes of Section 80G of the Income Tax Act, 1961.
 
 
"University" means a university established or incorporated by a Central, State or Provincial Act, and includes an institution declared under section 3 of the University Grants Commission Act, 1956 (3 of 1956), to be a university for the purposes of that Act.
Limit of Investment
 
There will be no maximum limit for investment in these Bonds.
Tax Treatment
 
  • Income-tax: Interest on the Bonds is taxable according to the tax status of the bond holder. However, tax would not be deducted at source from the interest payment.
  • Wealth tax: The Bonds will be exempt from Wealth-tax
Issue Price
 
The Bonds will be issued at par i.e. at Rs.100 percent.
Nomination
 

A sole holder or a sole surviving holder of a Bond, being an individual, may nominate, one or more persons who shall be entitled to the Bond and the payment thereon in the event of his/her death

Transferability
 
The Bond in the form of Bond Ledger Account shall NOT be transferable
Interest
 
  • The bond will be issued in cumulative and non-cumulative form, at the option of the investor.
  • The Bond will bear interest at the rate of 8% per annum. Interest to the holders opting for non-cumulative Bonds will be paid from date of issue up to 31st July/31st January, as the case may be and thereafter at half-yearly for period ending 31st July/31st January on 1st August and 1st February.
 
Interest on cumulative bonds will be compounded with half-yearly rests and will be payable on maturity along with the principal. The maturity value of the Bonds shall be Rs.1601/- (being principal and interest) for every Rs.1,000/-(Nominal). Interest on Bond in the form of “Bond Ledger Account” will be paid, by cheque/warrant or through ECS credit to bank account of the holder as per the option exercised by the investor/holder
Advances/Tradability against Bonds
 
The Bonds shall NOT be tradable in the secondary market and cannot be offered as collateral for loans from banks, financial Institutions and Non Banking Financial Companies, (NBFC) etc
Repayment
 
  • The Bonds shall be repayable on the expiry of 6 (Six) years from the date of issue.
  • No interest would accrue after the maturity of the bond.
 
 
 
 
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