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Firstly you have to know about Tax Free Bonds. Bonds are generally is a promise to repay the principal along with the interest on maturity. A bond is an instrument of indebtedness of the bond issuer to holder. the bond is a form of loan where holder of the bond is lender and issuer of the bond is borrower(debtor) and coupon is the interest. Type of Bonds:- Majorly there are two types of bonds. 1. Secured Bonds 2. Unsecured Bonds A bond that is secured by the issuer's pledge of a specific asset, which is a form of collateral on the loan, is called Secured bonds. Secured bonds are less risky but generally provide lower returns. While unsecured bonds are type of debt certificate that mostly offer a fixed rate of interest or annual sum until maturity. Unsecured bonds are generally either considered to be discounted or high interest rates and primarily issued by corporations. What are the Tax Free Bonds? Tax free refers to certain types of financial products that are not taxed and with earnings that are not taxed. Government will often provide a tax break to investors buying government bonds to ensure that enough funding will be available for the expenditure projects. Why invest with Tax Free Bonds :- Tax Free Bonds are popular investment options among investors tax free bonds offer tax benefits. These bonds generally issued by government entities, are exempted from taxation from such instruments under the income tax Act, 1961. But there bonds do not offer any taxation benefits under section 80-CCF of Income Tax Act, 1961. The interest made by bank FDs and other normal bonds are added to the income of the investor and they have to pay as per Income-tax slabs. Post-tax return from an FD that offers 8.5% annual interest would be 5.9% for an investor in the 30% tax bracket. Tax-free bonds are rated long-tenure (usually 10-15 years) fixed-income securities offering annual interest at rates less than the yield of government securities of similar tenure. At present, 10-year government bonds are trading around 8.3%. Going by these rates, one can expect the interest rate to be 8.0-8.8%. Benefits of Investing :- • Tax free income • Low risk • Companies have better credit ratings • Listing of bonds on various exchanges provide liquidity to your investment. • Options in holding bond in ‘Demat Form’ makes your investment easy to handle & monitor. • Ratings given Credit rating agencies CARE, FITCH, ICRA, CRISIL. How To Invest in Tax free Bonds :- With most long-term fixed deposit rates settling in the 8.5-8.75% range, investors looking for fixed-income instruments have an opportunity to invest in tax-free bonds that can give higher post-tax returns than FD’s. Public Issue :- During the public issue of bonds, you can invest in them by submitting a physical form furnishing the details as you requested. Exchange :- these bonds are listed on bse or nse or on both NSE and BSE. You can invest in these bonds through your demat account. So we can say that tax free bonds are much better for investment purpose. If you want to invest money and want to get best solution for your investment, just click here and fill the contact form our advisors will call you…click here Or Call Us 011-40000919
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