Investment Strategies-Bonds

INVESTMENT STRATEGIES - BONDS

Debt instruments like bonds, debentures and Govt. securities are very thinly traded and not accessible to retail investors so far. The best route to invest in such instruments are the Debt Funds of mutual funds. By doing so, you would get a diversified portfolio. And by active trading, mutual funds can generate extra yield of around 2-3 percent which is not possible for individual and even corporate investors. Apart from higher yield, you also get the advantage of tax-free dividend and in case of growth option, only 10.20% long-term capital gains tax if you stay invested for more than 12 months.

However, there is one option open to retail investors and that is Govt. of India Relief Bonds (popularly known as RBI Relief Bonds). These bonds give tax free yield of 8.5% per annum paid half yearly in the months of January and July. But there is a lock-in period of 5 years which you may keep in mind while investing in these bonds.

Capital Gain Bonds

We offer Capital Gains Bond under Section 54EC of the Income Tax Act, 1961. These bonds are being issued as 'Long term specified assets' within the meaning of Explanation (b) to sub-section (3) of Section 54-EC of the Income Tax Act, 1961. Those desirous of availing exemption from capital gains tax under Section 54 EC may invest in these bonds. Capital gains arising from transfer of Long-term capital assets can be invested in these bonds within a period of six months from the date of transfer of the asset for getting exemption from the capital gains tax. Such Bonds are issued by SIDB, NHB, NHAI and REC.

Key Features

Minimum investment of Rs10,000 and in multiples of Rs10,000 thereafter

Structure-I Tenure is 3 years. Interest Payment : Annual or Cumulative

Structure-II Tenure of Five years with Put or Call option at the end of 3 years

Structure-III Tenure of Seven years with Put or Call option at the end of 5 years

Interest Payment: Semi Annual,Annual or Cumulative

Lock-in-period of 3 years for all the structures

No TDS on Interest payable for Resident Investors

'CARE AAA' rating from CARE

Half yearly interest payable on 1 June and 1 December each year

Annual Interest payable on 1 June every year

Rate of Interest: Due to frequent change in the rate of interest, investors are requested to check the same before investing

NRIs, OCBs or FIIs are eligible to invest on non-repatriation basis

The issue is available on-tap

Registrars of the issue are Datamatics Financial Software and Services Ltd.