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Tax Free Bonds 2016 In India

 

Tax Free Bonds From Government Of India

According to analysis conducted by the economists, government of India is expected to issue new attractive tax free bonds with the estimated value of INR 60,000 crores for the year 2012-13. One of such bonds is offered by National Highway Authority of India (NHAI). Now question arises, is the interest rate offered on tax free bond worth your investment and will it safeguard your financial future? Before considering this as an investment option; let's get a quick look on what are tax free bonds?

Definition: These are non-taxable bonds. i.e. amount received from the interest rate received as well as the maturity proceeds are tax exempt. Important point to note is – you cannot claim tax deduction on the money invested which is possible in case of infrastructure bond. Money collected by the government are utilized in improvising and development of country's infrastructure.

Benefits

These bonds are free from all the taxes. i.e. No taxes are deducted at the source (TDS) subject to the condition that selling of these bonds does not take place before it's maturity period. In such case, Capital Gain Tax becomes mandatory.

    Interest Rate

    8.2% for 10 year period and 8.3% for 15 year maturity.

      Is it risky to invest:

      • No, unless you sell it before maturity.
      • Whenever the credit quality of the bond degrades, cost of the bond will go down.
      • Since trading volume for these stocks is comparatively low as compared to others,fluctuation in stock price cannot be ignored.

      How to buy and sell these bonds:

      In case, you've missed the opportunity for purchasing during the IPO, you can purchase it from the secondary market. You can also sell them in the secondary market. And this is the right time to sell as interest rates are expected to go down in the coming years and during these period these bonds trade at a very high level.

      Recommended For:

      • High net worth individuals as it does not carry any wealth tax. 
      • If long term financial planning is your aim, then it is not suitable.
      • If the returns offered meet the financial goal (10 year or 15 year), then you can invest.

      List of Issuers of Tax Free Bonds In India:

      • National Highway Authority of India (NHAI)
      • Indian Railway Finance Corporation (IRFC)
      • Power Finance Corporation (PFC)
      Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds

      Top 10 Tax Saving Mutual Funds to invest in India for 2016 or Best 10 ELSS Mutual Funds in india for 2016

      1. BNP Paribas Long Term Equity Fund

      2. Axis Tax Saver Fund

      3. Franklin India TaxShield

      4. ICICI Prudential Long Term Equity Fund

      5. IDFC Tax Advantage (ELSS) Fund

      6. Birla Sun Life Tax Relief 96

      7. DSP BlackRock Tax Saver Fund

      8. Reliance Tax Saver (ELSS) Fund

      9. Religare Tax Plan

      10. Birla Sun Life Tax Plan

      Invest in Best Performing 2016 Tax Saver Mutual Funds Online

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