The Reserve Bank of India (RBI) has recently announced the launch of taxable floating rate savings bonds 2020 at 7.15% interest rate.
Compared to the withdrawn RBI’s bonds at 7.75%, the new bond comes with several changes. Hence, if you wish to invest in it, then you will need to consider a few factors. Let’s take a quick look at those factors in this short post!
Compared to the earlier 7.75% RBI or GOI bonds, the new floating interest rate bonds will be repayable after 7 years from the issue date. Other than some specific investor categories, you can’t withdraw your invested amount before the 7 years lock-in period.
Floating interest rate
RBI has introduced the new floating interest rate at an interest rate of 7.15%, and it replaces the earlier 7.75%. The floating interest rate will be changed twice in a year. You will receive the payable interest on bonds after every 6 months. Therefore, the floating interest rate bonds keep out the cumulative interest payment alternative. But the investors would receive the interest at the time of maturity.
If you invest the RBI bonds at the floating interest rate, the received interest will be taxed on the basis of the income tax slab the income comes under. Other than that, TDS will also be deducted from the interest income.
The minimum investment in RBI bonds at the floating interest rate is Rs.1,000 and in multiples of Rs.1,000 after the initial investment. There is no maximum limit to the investment figure in these bonds.
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