Steep discount to offer price
The 10 year bond (N3) series has got listed at a price of Rs 971, against the offer price of Rs 1000 to original subscribers. This means it is now available at a steep discount. The N2 (15 year) series which has a tenure of 15 years is currently listed at Rs 954, against the offer price of Rs 1000 per bond. Now those buying these bonds would be paid a tax free interest rates of 8.1% for the 10 year tenure and 8.2% for the 15 year Bonds.
Tax free income
The income from these bonds are tax free and hence do not form part of the total income in computing income tax.
High post tax yields
If you are in the 20% and 30% tax bracket the post tax yields work out to anywhere between 9 and 11%.
Government owned institution
Being a government owned institution the bonds are secured.
Interest rates likely to fall
Interest rates are likely to fall and hence you are blocking bonds at attractive coupon rates for a longer period of time.
These bonds are traded on the NSE and BSE and hence offer liquidity.