NABARD is an apex development institution in India, having its headquarters in Mumbai (Maharashtra).
NABARD has a mandate under the NABARD Act to facilitate credit and other facilities for the promotion and development of agriculture, small scale industries, cottage and village industries, handicrafts and other rural crafts and other allied economic activities in rural areas in India.
NABARD (National Bank for Agriculture and Rural Development) Tax free bonds March 2016 is open for subscription from March 9- March 14, 2016.
Highlights of the NABARD Tax Free Bonds
- Issue price and Face value: Rs 1,000 each in the nature of debenture
- Minimum Investment: 5 Bonds for Rs 5,000
- Coupon Payment Date: Every year
- Interest rates: For 10 years it is 7.29 per cent. For 15 years 7.64 per cent.
- NRI's are not eligible to invest in such tax free bonds
- Individual can apply for physical form or demat form
- NABARD tax free bonds are listed on BSE
- TDS will not be applicable as there will be no tax on the interest.
- Bonds are rated AAA rating from India rating and CRISIL.
Who can consider?
Individuals who are falling in higher tax bracket can consider this as alternative to bank fixed deposits.
This makes these tax free bonds very attractive to buy, if you compare them with bank interest rates. For example, you can get a yield around 8 per cent in one of the public sector bank fixed deposits in the country.
For individuals in 30 per cent tax bracket, if they consider investing in 15 year bond for interest rate at 7.64 per cent the pre tax return would be around 11.13 per cent which is much higher when compared to bank deposits at 8 per cent. For individual in 20 per cent the return would be around 10.55 per cent.
Should you consider?
Well, if you are risk averse than only you can consider this as an alternative to bank fixed deposit. Or else can opt for mutual funds or equities with risk and high returns.