What are the eligibility criteria for investments in GOI 8% Savings Bond?
The Bonds may be held by -
(A) an individual, not being an NRI, -
(B) a Hindu Undivided Family.
(C) (i) 'Charitable Institution' to mean a Company registered under Section 25 of the Indian Companies Act 1956 or
(ii) an institution which has obtained a Certificate of Registration as a charitable institution in accordance with a law in force; or
(iii) any institution which has obtained a certificate from an Income Tax Authority for the purposes of Section 80G of the Income Tax Act, 1961.
(D) "University" means a university established or incorporated by a Central, State or Provincial Act, and includes an institution declared under section 3 of the University Grants Commission Act, 1956 (3 of 1956), to be a university for the purposes of that Act.
What is minimum amount of investment on these bonds and is there any upper limit on investments on these bonds?
The bonds will be issued for a minimum amount of Rs. 1,000/- (face value) and in multiples thereof. Accordingly, the issue price is Rs 1,000/- per bond. There is no maximum limit for investments in these bonds.
What is the rate of interest that these bonds offer? Is the interest paid half yearly or on a cumulative basis? What is the time limit for repayment of such bonds?
The bonds will bear interest at the rate of 8% per annum. Interest will be payable at half-yearly intervals from the date of issue or compounded with half-yearly rests and will be payable on maturity after 6 years along with the principal, as the subscriber may choose.
Can subscription to the bonds be made in cash or only by way of cheques/drafts?
The bonds can be subscribed in the form of cash/drafts/cheques. Cheques or drafts should be drawn in favour of the bank and payable at the place where the applications are tendered.
What is the form in which an individual will hold these bonds, are these in the form of certificates?
• The Bonds will be issued in the form of Stock Certificate or may be held at the credit of the holder in an account called Bond Ledger Account (BLA)
a) The Bonds in the form of Bond Ledger Account will be issued by and held with the Public Debt Offices of the Reserve Bank of India, designated branches of the agency banks and SHCIL as authorised by Reserve Bank.
b) The Bonds in the form of Stock Certificate will be issued only at the Offices of Reserve Bank of India.
c) The Certificate of Holding in respect of Bond Ledger Account and Stock Certificate will be issued in Green and Yellow colour for cumulative and non cumulative Bonds, respectively.
Of the above, which would be a convenient option for bondholders?
On the other hand applications for bonds in the form of Stock certificates will be received only at the offices of RBI, mentioned in (a) above.
Are these bonds transferable?
The Bonds in the form of Bond Ledger Account and Stock Certificate shall not be transferable.
Do the bonds offer nomination facility?
A sole holder or a sole surviving holder of a Bond, being an individual, may nominate one or more persons who shall be entitled to the Bond and the payment thereon in the event of his death.
Are these bonds tradable?
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.
Is tax deductible at sourceon the interest payment in case of 8% Saving Bonds?
In case of 8% Saving Bonds tax will be deducted at source while making payment of interest on the non-cumulative bonds from time to time and credited to Government Account. Tax on interest portion of the maturity value will be deducted at source at the time of payment of the maturity proceeds on the cumulative bonds and credited to Government Account.
In case I do not encash the bonds on expiry will I continue to earn interest?
No interest would be payable after maturity in case the bonds are not encashed.
What are the tax benefits available?
Interest on 8% Saving Bonds will be taxable under the Income-Tax Act, 1961 as applicable according to the relevant tax status of the bondholder. However these bonds will be exempt from Wealth-tax under the Wealth-tax Act.