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Floating Rate Savings Bonds, 2020 (Taxable)

  • Government of India has announced to launch Floating Rate Savings Bonds, 2020 (Taxable) scheme commencing from July 01, 2020.
  • Eligibility: The Bonds are open to investment by individuals (including Joint Holdings) and Hindu Undivided Families. NRIs are not eligible for making investments in these Bonds.
  • Features: The features of the scheme are given below:
    1. Applications for the Bonds in the form of Bond Ledger Account will be received in the designated branches only.
      For obtaining the list of designated branches, please click here.
    2. The Bonds will be issued in non-cumulative form only. The interest on the bonds is payable semi-annually on 1st January and 1st July every year. The coupon on 1st January 2021 shall be paid at 7.15%. The Interest rate for next half-year will be reset every six months. There is no option to pay interest on cumulative basis.
    3. There will be no maximum limit for investment in the Bonds.
    4. Income-tax: Interest on the Bonds will be taxable under the Income-tax Act, 1961 as applicable according to the relevant tax status of the bond holder.
    5. Wealth tax: The Bonds will be exempt from Wealth-tax under the Wealth- tax Act, 1957.
    6. The Bonds shall be repayable on the expiration of 7 (Seven) years from the date of issue. Premature redemption shall be allowed only for specified categories of senior citizens.
    7. The Bonds are not tradeable in the Secondary market and are not eligible as collateral for loans from banking institutions, non-banking financial companies or financial institutions.
    8. A sole holder or a sole surviving holder of a Bond, being an individual, can make a nomination.