Tax Free Bond
Tax free bonds have emerged as highly popular investment option among investors due to the taxation benefit that they offer. These bonds, generally issued by government backed entities, are exempt from taxation on the interest income received from such instruments under the Income Tax Act, 1961. However these bonds do not offer any additional taxation benefits under section 80CCF of Income Tax Act, 1961.
Tax-exempt bonds usually pay lower coupons than corporate bonds as they enjoy a better credit rating and the interest received is tax-free, thus after-tax returns work out to be higher for the tax-exempt bond.
Benefits of Investing:
Tax-Free Income
Low risk of default, since companies have a better credit rating
Listing of bonds on various exchanges provides liquidity
to your investments
Option of holding bonds in 'Demat Form' makes your investments easy to handle & monitor
Ratings by agencies like CARE, FITCH, CRISIL, ICRA enables you to assess the quality of instruments
Low risk of default, since companies have a better credit rating
Listing of bonds on various exchanges provides liquidity
to your investments
Option of holding bonds in 'Demat Form' makes your investments easy to handle & monitor
Ratings by agencies like CARE, FITCH, CRISIL, ICRA enables you to assess the quality of instruments
