GOI 7.75% Saving (Taxable) Bonds 2018 (Issued By Reserve Bank Of India)

In downward interest rate scenario, on 1 January 2018, government announced the closing of 8% Government of India (GoI) Savings (Taxable) Bonds, 2003 for further subscription. After initial outcry from the prospect investors, the government clarified on 3 January that new bonds will be launched, though at a lower rate of interest.

- Mohit Mittal

On 3 January, 7.75% Savings (Taxable) Bonds, 2018, were launched with Issue opening date of 10th January 2018. These bonds were very attractive among Senior Citizens and Charitable Trusts & Universities who invested their surplus funds at the rate of 8% per annum. Charitable Trusts and Universities, having Tax Exemption under Income Tax Act, 1961 enjoyed 8% tax free returns for long. But with some revised features, these institutions are not allowed to invest in 7.75%Saving Bonds, 2018.

Some Important Changes:

1. Interest Rate has been revised to 7.75% per annum from 8.00% per annum.

2. Tenure is increased to 7 years from 6 years.

3. Only Resident individual & HUF can invest (Trusts and universities cannot invest in new Bond Issue)

Features of GOI 7.75% Savings (Taxable) Bonds, 2018:

Who can invest?

The Bonds may be held by –

(i) an individual, not being a Non-Resident Indian

(a) in his or her individual capacity, or

(b) in individual capacity on joint basis, or

(c) in individual capacity on any one or survivor basis, or

(d) on behalf of a minor as father/mother/legal guardian.

(ii) a Hindu Undivided Family.

Issue Price: The Bonds will be issued at par i.e. at Rs.100.00. The Bonds will be issued for a minimum amount of Rs. 1,000 (face value) and in multiples thereof. Accordingly, the issue price will be Rs. 1,000 for every Rs. 1,000 (Nominal) face value.