From time to time the Government generally through the state Bank of India issues special Bonds which is popularly known as NRI Bonds. Mostly these Bonds are Tax-free Bonds. There is no wealth tax on these bonds so they are also gift tax free. India development Bonds, Resurgent India Bonds are some of the examples of NRI Bonds. These Bonds are generally designated in U>S Dollars and are issued to attract NRI’s settles at abroad. Presently the investments in these bonds are not available because they are not for sale now.
Tax free Bonds of Public Sector
A large number of public sector undertakings are now-a-days issuing tax-free Bonds. The special features of these Bonds are tax free irrespective of income.Investment in these bonds is quite lucrative. The bonds bear prevailing interest rate almost equal to Reserve bank’s tax free bonds. Before making investment in these a deep study of their interest rate is very important.
Benefit of Tax free Bonds of Public Sector
• Easy Transferable
• Can be easily sell in open market
• There is no wealth tax
• Effective investment plan for whom belongs to high income bracket
Taxable Bonds of private Sector
Like tax free bonds issued by the public sector is a separate series of public sector taxable bonds. These bonds generally bear an interest of 6% to 9% p.a