Wednesday, November 27, 2013

Tax Free Bonds ? What is it ?

Tax Free Bonds :-

Mostly issued by Government Enterprise and it pays you fixed interest rate, generally for 10,15 & 20 Years

Tax Benefits :- The Income from this bonds are treated as interest and it is fully exempted from tax. Also there is no TDS deduction.

Payment of Interest :- The Interest is paid Annually, credited to investor’s account directly.

Credit Risk:- these bonds are generally issued by government enterprises, considering that credit risk is very very low.

Issuance of Bonds :- Bonds are issued in Dmat as well as in Physical Mode.

Trade:- As this bonds are listed on stock exchange, one can buy and sell the bonds in Dmat.

Capital Appreciation :- If Interest rate goes down from here, you can also enjoy capital appreciation.