Where to Buy Tax-Free Bonds in India?

Where to Buy Tax-Free Bonds in India?

Tax-free bonds are low-risk government securities. As per the provisions given under section 10 (15) (iv) (h) of the Income Tax Act, 1961, the interest on these tax-free investments in India is completely exempted from the income tax.

There is no interest on tax-free bonds and this gives them their name.

Usually, tax-free bonds have a predefined rate of interest, and the money generated from them is used by the government to invest in infrastructure projects in the country.

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What are Tax-Free Bonds?

Tax-free bonds are government-issued securities with a long-term maturity period of 10 to 20 years. They are a safe haven for your hard-earned money as the risk of non-payment on these bonds is almost nil.

Tax-free bonds are primarily issued by government-backed bodies, to fulfil particular objectives. Municipal bonds issued by Municipal corporations are an example of tax-free bonds.

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If you are curious to know where to buy tax-free bonds in India and how to apply for tax-free bonds, we’ll tell you. Buying tax-free bonds is very easy as you can buy tax-free bonds in physical form or online by using your Demat account.

The subscription period for tax-free bonds is open for a limited period. You need to submit your KYC details such as ID proof and Address proof like your Aadhar card, PAN card, photograph, Voter ID Card, etc., for verification.

Once you submit your KYC documents and undergo the verification process successfully, you can trade in tax-free bonds via your Demat account.

One of the leading online bonds platforms to buy tax-free bonds online is BondsIndia. With BondsIndia, you can invest in tax-free bonds in just a few simple steps. If you do not have a Demat account, Bonds India also assists you in the easy opening of your Demat account. Not only this, but BondsIndia also guides you with the complete list of tax-free bonds available for

investment and other kinds of popular bonds such as government bonds, zero coupon bonds, corporate bonds, g-sec strips etc.

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Features of Tax-Free Bonds 1. Tax-free bonds are an extremely low-risk investment option and are very suitable for investors looking for assured returns on their investment.

2.

It is not very easy to liquidate tax-free bonds as they come with an extended lock-in period that can go up to 20 years.

3. Tax-free bonds can be bought physically or online using a Demat account on the secondary market, making them a profitable investment option.

4. The interest offered on tax-free bonds ranges from 5.50% to 6.50%. This interest given is pretty lucrative since they are a tax-free investment option. The interest on tax-free bonds is given out annually and is credited directly to the bank account of the bondholder.

5. You can invest up to Rs. 5 lakhs in tax-free bonds.

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Things to Know Before Investing in Tax-Free Bonds

1.

You cannot withdraw the invested amount from a tax-free bond before the completion of the lock-in period of the bond.

2.

You can conduct buying and selling of tax-free bonds on the various stock exchanges to trade in them and generate a profit which may be higher than the interest rate they offer.

3.

Tax-free bonds themselves are exempted from tax, but if you buy or sell tax-free bonds in the stock market, the capital gains thus received are taxable.

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If you can afford to invest your money for an extended lock-in period and are looking for a low-risk investment option with stable returns, tax-free bonds are your ideal option. If you are looking to buy tax-free bonds conveniently, click here.

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