7.75% Government Savings Bonds 2018

7.75% Government Savings Bonds 2018

The Government of India has announced the launch of 7.75% Savings (Taxable) Bonds Scheme, 2018, which will replace the 8% Savings Bonds Scheme. The 7.75% Government Savings Bonds will open for subscription from January 10, 2018. The bonds will have a maturity of seven years. The scheme will enable resident citizens and HUF (Hindu Undivided Families) to invest in a taxable bond without any monetary ceiling. The 7.75% Government Savings Bonds will be available in denominations of Rs 1,000 each and will only be issued in demat form and credited to the Bond Ledger Account (BLA) of the investor. In this article, I will discuss all the things you should know about 7.75% Government Savings Bonds 2018.

7.75% Government Savings Bonds 2018

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Who issues these Bonds?

7.75% Government Savings Bonds 2018 are being issued by the Government of India.

Who can invest in 7.75% Government Savings Bonds?

The 7.75% Government Savings Bonds may be held by

1. Individuals (including joint holdings and on behalf of a minor as father/mother/legal guardian).

2. A Hindu Undivided Family (HUF).

NRIs are not eligible for making investments in 7.75% Government Savings Bonds.

Issue price of 7.75 Government Savings Bonds

1. The Bond will be issued at par i.e. at Rs. 100.00.

2. The Bonds will be issued for a minimum amount of Rs. 1,000 (face value) and in multiples thereof. Accordingly, the issue price will be Rs 1,000 for every `1,000 (Nominal) face value.

3. The Bonds will be issued in demat form and credited to the Bond Ledger Account (BLA) of the investor.

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Limit of investment in 7.75% Government Savings Bonds

You can invest a minimum of Rs 1,000 and in multiple thereof .There is no maximum limit for investment in these Bonds.

Maturity Period of 7.75% Government Savings Bonds

The 7.75% Government Savings Bonds will have a maturity of 7 years.

Where to buy 7.75% Government Savings Bonds?

You can buy 7.75% Government Savings Bonds from State Bank of India, Nationalized Banks and private sector banks such as Axis Bank, ICICI Bank and HDFC Bank. These bonds can also be bought from the offices of Stock Holding Corporation of India Ltd (SHCIL) as well.

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Rate of Interest and Interest Payment Options

1. The 7.75% Government Savings Bonds will be issued in ‘Cumulative’ or ‘Non-cumulative’ form.

2. The 7.75% Government Savings Bonds will bear interest at the rate of 7.75% per annum.

3. Non-cumulative Bonds:

Interest will be payable at half-yearly.

4. Cumulative Bonds:

a) Interest will be compounded with half-yearly rests.

b) The cumulative value of Rs. 1,000 at the end of seven years will be Rs 1,703.

Taxation of 7.75% Government Savings Bonds

1. Interest on the 7.75% Government Savings Bonds will be taxable as per your income tax slab rate. Tax will be deducted at source (TDS) while making payment of interest.

2. The Bonds will be exempt from wealth-tax under the Wealth Tax Act, 1957.

Transferability of 7.75% Government Savings Bonds

The 7.75% Government Savings Bonds held to the credit of Bonds Ledger Account (BLA) of an investor shall not be transferable.

Advances/ Tradability against Bonds

The 7.75% Government Savings Bonds shall not be tradable in the secondary market and shall not be eligible as collateral for availing loans from banks, financial Institutions and Non-Banking Financial Companies.

Nomination under 7.75% Government Savings Bonds

1. A sole holder or all the joint holders of a Bond can make a nomination.

2. The investor can make separate nomination for each investment.

3. No nomination shall be made in respect of the Bonds issued in the name of a minor.

4. A nomination made by a holder of a Bond can be changed by a fresh nomination.

5. If the nominee is a minor, the holder of Bonds may appoint any person to receive the amount due in the event of his / her / their death during the period the nominee is a minor.

Also read: What is NPS (national Pension System)?
Also read: National Savings Certificate (NSC)

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7.75% Government Savings Bonds 2018