For those seeking comfort in safety of returns, the Government of India issued 8% savings bond once again comes to the fore. First launched in 2003, these bonds are issued by the government with a maturity of 6 years. The bonds are available at all times with specified distributors through whom you can apply to invest in them. Here is a quick guide to what the bond offers and its features to ascertain to check for suitability.
What are they
These are like any other government bonds with specified rate of interest. The rate is fixed at 8% per annum paid half yearly, or you can opt for cumulative payment of interest at the end of the tenure. You can buy these bonds from State Bank of India and its associates, other nationalized banks and some private sector banks such as HDFC Bank Ltd and ICICI Bank Ltd, among others. The bonds can be bought from the offices of Stock Holding Corporation of India as well. They are available in physical form only and are not listed or tradable on stock exchanges. The minimum investment amount is Rs1,000 (face value of one bond) and there is no maximum limit of investment. The interest received from these bonds is taxable, at the marginal rate of income tax you are liable to pay. Tax is deducted at source if your total interest exceeds Rs10,000.
