7.75% savings (taxable) bonds discontinued 

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.