Government of India has announced to launch Floating Rate Savings Bonds, 2020 (Taxable) scheme commencing from July 01, 2020.
Floating Rate Savings Bonds, 2020 (Taxable)
The Bonds are open to investment by individuals (including Joint Holdings) and Hindu Undivided Families. NRIs are not eligible for making investments in these Bonds.
The Bonds will be issued at par i.e. at ₹ 100.00 per cent
The Bonds will be issued for a minimum amount of ₹ 1000/- (face value) and in multiples thereof. Accordingly, the issue price, will be ₹ 1000/- for every ₹ 1,000/- (Nominal).
The Bonds will be issued in demat form (Bond Ledger Account) only
A certificate of holding will be issued to the customer as proof of subscription
The broad features of the scheme are given below:
Applications for the Bonds in the form of Bond Ledger Account will be received in the designated branches of SBI, Nationalised banks, IDBI Bank Ltd, Axis Bank Ltd, HDFC Bank Ltd and ICICI Bank Ltd.
Subscription to the bonds will be in the form of cash (upto ₹20,000/- only)/drafts/cheques or any electronic mode acceptable to the Receiving Office
The Bonds will be issued in non-cumulative form only.
There will be no maximum limit for investment in the Bonds.
Income-tax: Interest on the Bonds will be taxable under the Income-tax Act, 1961 as applicable according to the relevant tax status of the bond holder.
Wealth tax: The Bonds will be exempt from Wealth-tax under the Wealth- tax Act, 1957.
The Bonds shall be repayable on the expiration of 7 (Seven) years from the date of issue. Premature redemption shall be allowed for specified categories of senior citizens.
The Bonds are not tradeable in the Secondary market and are not eligible as collateral for loans from banking institutions, non-banking financial companies or financial institutions.
The interest on the bonds is payable semi-annually on 1st Jan and 1st July every year. The coupon on 1st January 2021 shall be paid at 7.15%. The Interest rate for next half-year will be reset every six months, the first reset being on January 01, 2021. There is no option to pay interest on cumulative basis.
A sole holder or a sole surviving holder of a Bond, being an individual, can make a nomination
FAQ ON FLOATING RATE SAVINGS BONDS 2020(TAXABLE)
1.Which are the offices authorised to receive Floating Rate Savings Bonds 2020 (Taxable)application?
Application for the bonds can be received at:
Any number of branches of SBI, Nationalised Banks, three private sector banks and SCHIL (Stock holding Corporation of India).
Branches of any other bank as specified by the RBI in this behalf from time to time.
2.How the RBIBONDS are issued?
These bonds are issued in a electronic form and are credited to the investor’s, Bond Ledger Account (BLA) on the date of tender of cash or the date of realization of draft/ cheque. A certificate of holding to be issued to the customer as proof of subscription.
3.Who can Invest?
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.
A Hindu Undivided Family.
4.What is the limit of Investment?
There is no maximum limit on investment.
5.What is the issue price?
The bonds is issued at par or at 100%, i.e. the amount of the bond will be for exactly the amount that has been paid. The bonds is issued at a minimum of 1000 INR, and multiples thereof.
6.What is the maturity period?
The Bonds shall be repayable on the expiration of 7 years from the date of issue. No interest will be paid after maturity of Bond.
7.Whether interest is Taxable?
Interest on the Bonds will be taxable under the Income Tax Act, 1961 as applicable according to the relevant tax status of the Bond holders.
8.Whether Wealth Tax is applicable for these Bonds.
The Bonds will be exempt from wealth-tax under the Wealth Tax Act, 1957.
9.Whether Tax exemption is allowed for any individual?
YES .This is for the applicants who have obtained exemption from Income Tax under the relevant provisions of the Income Tax Act, 1961. They shall make a declaration to that effect in the application (in Form A) and submit a true copy of the certificate obtained from Income Tax Authorities
10.Can I make nomination?
YES. An individual person who holds the bonds may nominate another person or persons in the event of their death who shall be entitled to the ownership as well as any payment due on the bond.
11.Whether I can transfer the Bonds?
NO. The Bonds held to the credit of Bonds Ledger Account of an investor shall not be transferable.
12.Can a loan be taken against Floating Rate Savings Bonds 2020 (Taxable)?
NO. These bonds are not eligible as collaterals to avail loans from banks, Non-Banking Financial Companies (NBFCs) and financial Institutions.
14.What is the date of payment of Interest for these Bonds?
Interest to the holders opting for these bonds will be paid from date of issue up to 30th June / 31st December as the case may be, and thereafter half-yearly for period ending 30th June and 31st December on 1st July and 1st January.
15. What will be mode of payment of half yearly interest for RBI Bonds to the investors?
Interest on Bonds held to the credit of Bonds Ledger Account of an investor will be paid, electronically by credit to bank account of the holder as per the option exercised by the investor/ holder
16.Whether Premature-withdrawal is allowed?
Premature encashment in respect of the Bonds shall be allowed for individual investors in the age group of 60 years and above, subject to submission of document relating to date of birth of the investor in support of age to the satisfaction of the issuing bank,
17.What is the minimum lock in period for premature withdrawal?
Minimum lock in period from the date of issue as indicated below:
Lock in period for investors in the age bracket of 60 to 70 years shall be 6 years from the date of issue.
Lock in period for investors in the age bracket of 70 to 80 years shall be 5 years from the date of issue.
Lock in period for investors in the age of 80 years and above shall be 4 years from the date of issue
18.Whether premature withdrawal is permitted for joint account holder if any of the individual is above 60 years of age.?
YES .In case of joint holders or more than two holders of the Bond, the above lock in period will be applicable even if any one of the holders fulfils the above conditions of eligibility.
19.How the penalty will be calculated for premature withdrawal?
The 50% of interest due and payable for the last six months of the holding period will be recovered in such cases,
20.How the Tax is deducted at Source?
Tax will be deducted at source while making payment of from time to time and credited to Government Account.
21.What is the rate of Interest?
Rate of Interest will be NSC rate +35 basis point and will be reset after 6 months.