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7.75% savings (taxable) bonds discontinued 

  • IASbaba
  • June 8, 2020
  • 0
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7.75% savings (taxable) bonds discontinued 

Part of: GS-Prelims and GS-III – Economy

In News:

  • The Government of India has discontinued 7.75% savings (taxable) bonds, 2018 recently. 

Key takeaways 

  • Recently, repo rate (by RBI) deposit rates (by banks) and small savings rate (by the government) were also decreased.
  • Investors were looking for safer investment rather than high returns. 
  • This led to the high demand for such bonds due to which the government decided to discontinue this option. 
  • Only fresh issuance of such bonds is discontinued.

Important value additions 

7.75% RBI Savings Bonds, 2018

  • These were issued in 2018. 
  • These were available for subscription to resident citizens/Hindu Undivided Family (HUF) to invest in a taxable bond.
  • These bonds were first introduced in 2003 as 8% GOI Savings (Taxable) Bonds.
  • The interest rate was brought down to 7.75% in January 2018.
  • One bond was of Rs 1,000 each. 
  • The bonds had no maximum limit for investment.
  • The bonds had a 7-year lock-in period from the date of issue. 
  • Premature encashment was permitted to individuals who were 60 years and above.
  • Interest on these bonds is taxable under the Income-tax Act, 1961.

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