- Tax
Saving Bond
- Regular
Income Bond
- Money Multiplier Bond
Tax
Saving Bond
Investors can avail of rebate
under Section 88 of the Income Tax Act, 1961 by investing in this Bond.
The proceeds from this Bond shall be deployed towards infrastructure projects
in accordance with the Income-tax Rules.
The Central Board of Direct Taxes (CBDT), Department of Revenue, Ministry
of Finance, Government of India has vide its letter F.NO.178/ 57/2000-IT(AI)
dated August 17, 2000 declared the Tax Saving Bond as eligible security
for the purpose of Section 88 of the Income-tax Act, 1961. The tax rebate
under Section 88 can be availed of by NRIs provided NRIs opt not to be
assessed under the Special Provision(s) of Chapter XII-A of the Income-tax
Act, 1961.
The investors can choose either/both of the following options in respect
of Tax Saving Bond:
|
Option
|
I
|
II
|
| Tax
Benefit under Section |
88
|
88
|
| Issue
Price (Rs.) |
5,000/-
|
5,000/-
|
| Face
Value (Rs.) |
5,000/-
|
7,000/-
|
| Redemption
Period |
3
years
|
3
years
4 months
|
| Interest
(%)* (p.a.) |
10.50
|
DDB
@
(YTM 10.6%)
|
| Interest
Payable |
Annually
|
DDB
@
|
| Minimum
Application |
1
Bond
|
1
Bond
|
Yield
to Investor (%)* > #
(Including Tax Benefits) |
21.7
|
19.7
|
@ Tax Saving Bond-Option II is in the nature of Deep Discount Bond (DDB),
hence no periodic interest is payable.
* Subject to TDS as per the then prevailing tax laws.
> It has been assumed that a surcharge of 15% of tax is payable in case
of both the options.
# Rounded off to nearest multiple of 0.1
Notes:
(i) Under Section 88, individuals and HUFs would be entitled to claim
rebate on investments made up to Rs. 80,000/-.
(ii) Investors applying for Option II would be entitled to benefit under
Section 88 in respect of Issue Price only and not on the Face Value of
the Bond.
Tax Benefits under Option I (Annual Interest)
Please refer points 1, 2, 4 & 5 of II A of the Tax Benefits on page
22.
For NRIs/OCBs, refer points 1 to 7 and 9 of II B of the Tax Benefits.
For other eligible institutions, refer points 1 and 2 of II C of the
Tax Benefits.
Tax Benefits under Option II (in the nature of Deep Discount Bond)
Please refer points 1 to 5 of II A of the Tax Benefits.
For NRIs/ OCBs, refer points 1 to 9 of II B of the Tax Benefits.
For other eligible institutions, refer points 1 and 2 of II C of the
Tax Benefits.
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Regular
Income Bond
This Bond has been designed keeping in view the need for a regular income
to meet expenses that are incurred on a regular basis - for example, household
expenses. The product also helps provide a source of income to individuals
who have either a variable income (Self Employed Professional, etc.) or
who are not employed any longer. Depending upon their requirements investors
can choose Monthly/ Half-yearly/Annual option for payment of interest.
Face Value : Rs. 5,000/-
Redemption : At Face Value, i.e., Rs. 5,000/-
The investors can choose any/all of the following options in respect of
payment of interest.
|
Option
|
I
|
II
|
III
|
| Minimum Application |
3 Bonds
|
2 Bonds
|
1 Bond
|
| Redemption Period |
5 years
|
5 years
|
5 years
|
| Interest*(%) (p.a.) |
10.75
|
11.00
|
11.40
|
| Interest Payable |
Monthly
|
Half-yearly
|
Annually
|
| Yield to Investor(%)*# |
11.3
|
11.3
|
11.4
|
* Subject to TDS as per the then prevailing tax laws.
# Rounded off to nearest multiple of 0.1
For Tax Benefits :
Please refer points 1, 2 & 5 of II A of the Tax Benefits on page 22.
for NRIs/OCBs, refer points 1 to 7 of II B of the Tax Benefits.
for other eligible institutions, refer points 1 and 2 of II C of the
Tax Benefits.
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Money
Multiplier Bond (in the nature of Deep Discount Bond)
Events such as a childs wedding, education, purchase of a house, etc.,
require a lumpsum at a particular point in time. This product has been
designed to meet these and similar such requirements.
Each Money Multiplier Bond in the nature of Deep Discount Bond will have
a different Face Value under each Option and will be issued at a discounted
price.
The investors can choose any/all of the following options (as per the
table below) in respect of the Money Multiplier Bond:
|
Option
|
I
|
II
|
III
|
IV
|
V
|
| Issue Price (Rs.) |
5,000/-
|
5,000/-
|
5,000/-
|
5,000/-
|
5,000/-
|
Redemption
Period |
3 years
10 months
|
6 years
5 months
|
10 years
|
14 years
8 months
|
20 years
11 months
|
| Face Value (Rs.) |
7,475/-
|
10,000/-
|
15,000/-
|
25,000/-
|
50,000/-
|
| Minimum Application |
1 Bond
|
1 Bond
|
1 Bond
|
1 Bond
|
1 Bond
|
| Yield to Investor (%)*# |
11.1
|
11.4
|
11.6
|
11.6
|
11.6
|
* Subject to TDS as per the
then prevailing tax laws
# Rounded off to nearest multiple of 0.1
For Tax Benefits :
Please refer points 1, 2, 3 & 5 of II A of the Tax Benefits on page
22.
for NRIs/OCBs, refer points 1 to 8 of II B of the Tax Benefits.
for other eligible institutions, refer points 1 and 2 of II C of the
Tax Benefits.
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|
