1. 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:

@ 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 (see overleaf).
— 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.

Taxation

Section 88

Subscription to Option I and II would entitle Individuals and HUFs to a rebate from Income-tax @ 20 per cent (@ 25 per cent in case of authors, playwrights, artists, musicians, actors or sportsmen) of the aggregate of the sums paid or deposited (up to Rs. 80,000/-) in a financial year by the taxpayer out of his income chargeable to tax as prescribed in clause (xvi) of sub-section 2 of Section 88 of the Income-tax Act, 1961.

To avail benefit under Section 88, such investment needs to be held for a period of at least three years.
The CBDT has clarified that the investors would be allowed to obtain benefit under Section 88 with respect to the Date of Application, to the extent of allotment made. 2.


2. REGULAR INCOME BOND

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.
 

* 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 (see overleaf).

— 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.

3.MONEY MULTIPLIER BOND (in the nature of Deep Discount Bond)

The investors can choose any/all of the following options

* 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 (see overleaf).

— 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.