For Quick Alerts
For Daily Alerts

REC Tax Free Bonds: A Great Chance To Earn Tax Free Interest Income


Rural Electrification Corporation (REC) plans to raise tax free bonds of Rs 300 crores, with an option to retain up to Rs 700 crores. Retail investors have an opportunity to earn interest up to 7.43% on these tax free bonds.The interest earned on these bonds is absolutely tax free in the hands of investors.

REC Tax Free Bonds: A Great Chance For Tax Free Interest Income
Details of the REC Tax Free Bond Issue

1) Rural Electrification Corporation Ltd is A Government of India Undertaking company.

2) Base Issue Size: Rs 300 Cr with an option to retain oversubscription upto 700 Crores.

3) Credit Ratings: AAA/Stable by CRISIL, AAA by ICRA and CARE, IND AAA/Stable by IRRPL.

4) Interest on these Bonds is Tax-Free, no TDS is applicable, Wealth Tax is not levied.

Options Option 1 Option II Option III
Tenor 10 years 15 years 20 years
Interest Payment Annually Annually Annually
For retail investors 7.14% 7.34% 7.43%
Face value Rs 1000 Rs 1000 Rs 1000
Minimum application Rs 5000 Rs 5000 Rs 5000
Interest on refund 5.00% 5.00% 5.00%
Listing on BSE BSE BSE

Who should subscribe to the REC Tax Free Bonds?

Banks are offering a maximum interest of around 8% on fixed deposits. In fact, the best interest you can get on a State Bank of India fixed deposit is just 7.55 per cent per annum. REC Tax Free Bonds is offering you an interest rate of 7.43%.

But, remember that interest income from any bank deposit has to be added to total income for the the purpose of payment of income tax. So, it is not tax free. Interest on the REC Tax free bonds is tax free.

So, if you are investor who is paying taxes and has substantial investments in fixed deposits, then it makes sense to invest in the REC Tax Free Bonds. The post tax yield for those in the 10, 20 and 30 per cent tax bracket is much higher in the REC Tax Free Bonds.

The bonds would also be listed on the exchanges, which would thus make them east to sell as well, if your wish to sell the same. However, these bonds are not very liquid and hence you cannot buy and sell large quantities.

Read more about: rec tax free bonds
Company Search
Get Instant News Updates
Notification Settings X
Time Settings
Clear Notification X
Do you want to clear all the notifications from your inbox?
Settings X
We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Goodreturns sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Goodreturns website. However, you can change your cookie settings at any time. Learn more