7.75% is the new 8%; govt to issue new bonds at lower rate
The lower interest rate on the GoI 8% Taxable Bonds is in sync with the rate cuts on other small savings schemes
The government has now clarified that the GoI 8% Taxable Bonds (also called the 8% RBI Bonds) will be replaced by new bonds rather than being scrapped altogether. A new tranche of bonds paying out an interest of 7.75% will be made available to the public.
About the bonds
- The GoI Taxable bonds have a maturity of 6 years.
- As the name suggests the interest on them is taxable. It will be added to your income and taxed as per your slab.
- The interest is payable half-yearly. However, you can also choose the cumulative option in which case the interest is paid to you when the bond matures.
- The minimum investment amount in them is Rs 1,000 and there is no maximum limit. However, investments have to be made in multiples of Rs 1000.
- The bonds are not available to Non-Resident Indians.
- They cannot be traded on an exchange and you cannot borrow money against them from banks.
- These bonds can be bought at par. This means that you don’t have to pay more than Rs 100 for a bond with a face value of Rs 100. You can buy them from bank branches.
The lower interest rate on the 8% bonds is in sync with the rate cuts on other small savings schemes that we outline here.
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