Floating Rate Savings Bonds, 2020 (Taxable)
Government of India has announced to launch Floating Rate Savings Bonds, 2020 (Taxable) scheme commencing from July 01, 2020 to enable Resident Indians/HUF to invest in a taxable bond, without any monetary ceiling.
The bonds are so called as they carry floating interest rate option. The rates will be linked with prevailing National Saving Certificate (NSC) rate with a spread of (+) 35 bps over the respective NSC rate.
The broad features of the scheme are given below:
| Eligibility* |
|
| Interest Rate (Floating) | (i) Option – The interest will be payable at half yearly intervals on Jan 1st and July 1st every year.
(ii) Rate – The coupon/interest would be reset half yearly starting with Jan 1st, 2021 and thereafter every July 1st and Jan 1st. The coupon rate for first coupon period, payable on January 1, 2021 is fixed at 7.15%.
(iii) Base Rate – The coupon rate will be linked/pegged with prevailing National Saving Certificate (NSC) rate with a spread of (+) 35 bps over the respective NSC rate. |
| Repayment/Tenor | Repayable on the expiration of 7 (Seven) years from the date of issue. Premature redemption shall be allowed for specified categories of senior citizens. |
| Tax treatment | Interest on the Bonds will be taxable under the Income-tax Act, 1961 |
| Tradability /Advances | Not be tradable in the secondary market and shall not be eligible as collateral for loans. |
| Transferability | Not be transferable except transfer to a nominee(s)/legal heir in case of death of the holder of the bonds. |
| Nomination | A sole holder or a sole surviving holder of a Bond, being an individual, can make a nomination. |
| Form of the Bonds | Issued only in the electronic form and held at the credit of the holder in an account called Bond Ledger Account (BLA), opened with the Receiving Office. |
*icicidirect.com offers these bonds online for Individuals, HUFs by apply by filling the application form.