I) 7.15% Savings (Taxable) Bonds, 2018
With the government maintaining status on interest rates of small savings schemes for the last quarter of the current fiscal, the Reserve Bank of India’s (RBI) Floating Rate Savings Bonds, 2020 (Taxable) will continue to fetch the same interest rate, i.e., 7.15% till the next reset date of July 1, 2021.
The interest rate on the RBI bonds is linked to the rate on National Savings Certificates (NSCs) with a 0.35% gap and is reset every 6 months. In Jan 2021 the rate was 7.15% given the 6.8% interest rate on NSCs. … The RBI bonds have a tenor of 7 years and the interest rate on them is fully taxable.
2. Eligibility for Investment: The Bonds may be held by –
(i) an individual, not being a Non-Resident Indian-
a.in his or her individual capacity, or
b.in individual capacity on a joint basis, or
c.in individual capacity on anyone or survivor basis, or
d.on behalf of a minor as father/mother/legal guardian.
(ii) a Hindu Undivided Family.
3. Limit of Investment:
There will be no maximum limit for investment in the Bonds.
4. Tax Treatment:
(i) Interest on the Bonds will be taxable under the Income Tax Act, 1961 as applicable according to the relevant tax status of the Bond holders.
(ii) The Bonds will be exempt from wealth-tax under the Wealth Tax Act, 1957.
5. Issue Price:
(i) The Bond will be issued at par i.e. at ₹ 100.00.
(ii) The Bonds will be issued for a minimum amount of ₹ 1,000 (face value) and in multiples thereof. Accordingly, the issue price will be ₹ 1,000 for every ₹1,000 (Nominal) face value.
Tax Deduction at Source
i. Tax will be deducted at source while making payment of interest on the Non-Cumulative Bonds from time to time and credited to Government Account.
ii. Tax on the interest portion of the maturity value will be deducted at source at the time of payment of the maturity proceeds on the Cumulative Bonds and credited to Government Account.
Provided that tax will not be deducted while making payment of interest/ maturity proceeds, as the case may be, to individual/s who have made a declaration in the application form that they have obtained exemption from tax under the relevant provisions of the Income Tax Act, 1961 and have submitted a true copy of the certificate obtained from Income Tax Authorities.