Floating Rate Savings Bonds 2020 (Taxable)
Floating Bonds, Interest Ascends Higher!
The government has launched Floating Rate Savings Bonds, 2020 (Taxable) with an interest rate of 8.05 percent. The bonds are available for subscription July 1, 2020 onwards. The interest rate on these bonds will be reset every six months, the first reset being on January 01, 2021.
Key Benefits
Stay Afloat with Secure Returns: Embrace Floating Rate Savings Bonds
Eligibility
An Indian Resident Individual, Minor & HUF.
Minimum Amount
You do not have to conduct your own research and analysis, saving precious time.
Maturity Period
7 Years. Bonds are not transferable/tradable. Interest on bonds is taxable & payable half yearly. No cumulative option.
Features
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| Item | |
|---|---|
| Scheme Name | Floating Rate Savings Bonds, 2020 (Taxable) |
| Issuance | To be issued by Reserve Bank India on behalf of the Government of India. |
| Eligibility | The Bonds may be held by –
(i) a person resident in India,- (a) in his individual capacity, or (b) in individual capacity on joint basis, or (c) in individual capacity on any one or survivor basis, or (d) on behalf of a minor as father/mother/legal guardian (ii) a Hindu Undivided Family. |
| Issue Price | The Bonds will be issued at par at Rs.100/-for a minimum amount of Rs.1000/- (face value) and in multiples thereof. |
| Date of Issue | The Bonds will be issued, in electronic form and credited to the Bond Ledger Account (BLA) of the Investor/s on the date of the tender of cash or the date of realization of draft/cheque/funds. |
| Form of the Bonds | The Bonds will be issued, in electronic form and credited to the Bond Ledger Account (BLA) opened with the Receiving offices. The investors will be issued a Certificate of Holding for the same. |
| Maximum Limit | There will be no maximum limit for investment in the Bonds. |
| Subscription | Subscription to the Bonds will be in the form of Cash (uptoRs.20,000 only)/drafts/cheques or any electronic mode acceptable to the Receiving Office. Cheques or drafts should be drawn in favour of the Receiving Office and payable at the place where the applications are tendered. |
| Repayment/Tenor | (i) The Bonds shall be repayable on the expiration of 7 (Seven) years from the date of issue.
(ii) Premature encashment in respect of the Bonds be allowed for individual investor in the age group of 60 years and above, subject to submission of document relating to the date of birth of the investor in support of age to the satisfaction of the issuing bank, after minimum lock in period from the date of issue as indicated below: (a) Lock in period for investors in the age bracket of 60 to 70 years shall be 6 years from the date of issue. (b) Lock in period for investors in the age bracket of 70 to 80 years shall be 5 years from the date of issue. (c) Lock in period for investors in the age bracket of 80 and above years shall be 4 years from the date of issue. (iii) In case of join holders or more than two holders of Bonds any one of the holder of bonds any one of the holders shall fulfill the above conditions of eligibility. (iv) After aforesaid minimum lock in period from the date of issue an eligible investor can surrender the bonds any time after 12th 10th and 8th half corresponding to the respective lock in period but redemption payment will be made on the following interest payment due date. Thus the effective date of premature encashment for eligible investor will be 1st January and 1st July every year. However, 50% of interest due and payable for the last six months of the holding Period will be recovered in such cases. |
| Interest Rate(Floating) | The interest on the bonds is payable semi-annually on 1st Jan and 1st July every year. The coupon on 1st January 2021 shall be paid at 8.05%. The Interest rate for next half-year will be reset every six months, the first reset being on January 01, 2021. There is no option to pay interest on cumulative basis. |
| Tax Treatment | Interest on the Bonds will be taxable under the Income-tax Act, 1961as amended from time to time and as applicable according to the relevant tax status of the Bonds holder. |
| Tax Deduction at Source | Tax deducted at source while making payment of interest on the bonds from time to time and credited to Government Account. Provided that tax will not 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 as amended from time to time and have submitted a true copy of the certificate obtained from Income Tax Authorities. |
| Transferability | The Bonds in the form of Bond Ledger Account shall not be transferable except transfer to a nominee(s)/legal heir in case of death of the holder of the bonds. |
| Nomination | A sole holder or all the joint holders (investors) of Bonds, being individual/s, may nominate in Form C or as near thereto as may be, one or more persons who in the event of death of sole holder / joint holder, as the case may be, would be entitled to the Bonds and to the payment thereon. |
| Tradability /Advances | The Bonds shall not be tradable in the secondary market and shall not be eligible as collateral for loans from banks, financial Institutions and Non-Banking Financial Company (NBFC) etc. |
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