Tax Free Bonds

Tax free bonds are issued by fully owned government enterprises to raise funds for infrastructure and housing. These bonds have a complete tax exemption on interest income. They deliver superior post tax returns as compared to fixed deposits.

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Earn yield of approx 4.5% p.a.* No tax on interest income!
Invest in bonds issued by PSUs which are owned by Government of India and have an effective sovereign guarantee
Get higher post tax returns compared with fixed deposits with similar safety profile
* Yields are subject to market interest rates and are correlated with the policy rates set by RBI. Percentages quoted above are not guaranteed and may differ at the time of actual purchase. However, the yield is locked in once the transaction is completed.
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Comparison With Fixed Deposits

Tax Free BondsFixed Deposits
Returns~4.5% yield (No-tax)~5.5% before tax, 3.5-4% after tax
LiquidityLow - can be sold in secondary marketsHigh - can be redeemed before maturity with penalty
IssuerPublic Sector Companies such as NHAI, IRFC, PFCBanks
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