RBI Bond: If you want to increase your money, invest it instead of accumulating it. You get returns on investment and your money keeps increasing. But there are many investment options available in the market.
In such a situation, it is very important to understand where you will get good interest by investing your hard-earned money.
Even today, many people believe in Fixed Deposits (FD).
People consider their investment safe in FDs.
Plus they get a fixed interest rate on their investment, which makes them believe that they will get this much interest even if the market fares poorly.
But if you want, you can also invest in RBI bonds.
RBI Bonds are also considered a safe investment and at present, they can help you earn more interest money than FD.
At present, RBI bonds provide an interest rate of 8.5 per cent.
Any Indian citizen can invest
Government of India Savings Bond is also called the RBI Bond.
This is a floating rate saving bond.
Any Indian citizen can invest in it.
You can invest in this bond in the name of a minor as a guardian.
You can also apply for it jointly.
Interest is decided according to NSC
Being a floating rate savings bond, the interest rate does not remain the same throughout the tenure.
It keeps changing from time to time.
The interest on this bond is determined half-yearly (July 1 and January 1).
Its interest is decided according to the National Savings Certificate (NSC).
Bond holders get 35 basis points more interest for the respective half years than the interest on NSC on July and January 1.
For the current half year, interest is being given on NSC at the rate of 7.7 per cent, whereas on RBI bonds, it is 8.5 per cent.
7 years lock-in period
You can buy RBI bonds worth at least Rs 1,000.
After this, you will have to invest only in multiples of Rs 1,000.
There is no limit on maximum investment in this.
The lock-in period in RBI bonds is 7 years, that is, you cannot withdraw money till this period.
However, senior citizens get the option of premature exit.
But a deduction is made for premature exit.
According to the rules, investors aged 60 to 70 years can do premature redemption after 6 years; investors aged 70 to 80 years can do premature redemption after 5 years; while investors above 80 years can do premature redemption after 4 years.
You can invest like this
RBI bonds can be purchased from any government bank, including State Bank or private banks like ICICI, IDBI, HDFC or Axis.
Interest is paid on this bond on a half yearly basis.
The interest received on this bond is taxable.
You will have to pay tax according to the income tax slab you fall in.
Apart from this, TDS will also be applicable on interest income.
However, TDS will be deducted only when the interest is more than Rs 10,000 in a financial year.
It is also important for the investor to know that this bond is not transferable.
This can be transferred in the name of the nominee only after the death of the investor.