7.75% Savings (Taxable) Bonds 2018 : Notification : Download

By | January 5, 2018
(Last Updated On: January 5, 2018)

7.75% Savings (Taxable) Bonds 2018

7.75% Savings (Taxable) Bonds 2018 notified on 03.01.2018 by Notification No S.O.44(E)

MINISTRY OF FINANCE
(Department of Economic Affairs)
NOTIFICATION
New Delhi, the 3rd January, 2018
7.75% Savings (Taxable) Bonds 2018

S.O.44(E).— The Government of India, hereby notifies the issue of 7.75% Savings (Taxable)
Bonds, 2018 (“the Bonds”) from January 10, 2018 until further notice. The terms and condition of the
issue of the Bonds, shall be as follows:

2. Eligibility for Investment:

The Bonds may be held by –

(i) an individual, not being a Non-Resident Indian

(a) in his or her individual capacity, or
(b) in individual capacity on joint basis, or
(c) in individual capacity on any one or survivor basis, or
(d) on behalf of a minor as father/mother/legal guardian.

(ii) a Hindu Undivided Family.

3. Limit of Investment:

There will be no maximum limit for investment in the Bonds.

4. Tax Treatment:

(i) Interest on the Bonds will be taxable under the Income Tax Act, 1961 as applicable according to
the relevant tax status of the Bond holders.
(ii) The Bonds will be exempt from wealth-tax under the Wealth Tax Act, 1957.

5. Issue Price:

(i) The Bond will be issued at par i.e. at Rs 100.00.

(ii) The Bonds will be issued for a minimum amount of Rs 1,000 (face value) and in multiples

thereof. Accordingly, the issue price will be Rs 1,000 for every Rs 1000 (Nominal) face value.

6. Subscription

(i) Subscription to the Bonds will be in the form of Cash/ Drafts/ Cheques or any electronic mode
acceptable to the receiving office.
(ii) Cheques or drafts should be drawn in favour of the bank (Receiving Office), specified in
paragraph 10 below and payable at the place where the applications are tendered.

7. Date of Issue

The Bonds will be issued, in demat form and credited to the Bond Ledger Account (BLA) of the
investor/s on the date of tender of cash or the date of realization of draft/ cheque.

8. Form

(i) The Bonds will be issued only in the demat form and held at the credit of the holder in an
account called Bonds Ledger Account (BLA), opened with the receiving bank.
(ii) The Bonds issued to the credit of BLA of an investors will be held by any number of branches of the
banks and SHCIL, as authorised by Reserve Bank of India, as specified in paragraph 10 below.
(iii) A Certificate of Holding as specified in form Annexure 1 will be issued to the holder/s of Bonds held
to the credit in BLA (in Form TBX or Form TBY as applicable).

9. Application:

(i) Applications for the Bonds, either in physical form or electronic form, may be made in Form A
attached hereto as Annexure 2 or in any other form as near as thereto stating clearly the
amount, name and full address of the applicant/s.
(ii) Applications should be accompanied by the necessary payment in the form of cash/ drafts/
cheques / electronic credit as indicated in paragraph 6 above.
(iii) Applicants who have obtained exemption from Income Tax under the relevant provisions of the
Income Tax Act, 1961, shall make a declaration to that effect in the application (in Form A) and
submit a true copy of the certificate obtained from Income Tax Authorities.

10. Receiving Offices

Applications for the Bonds will be received at:
(a) Any number of branches of State Bank of India, Nationalised Banks, three private
sector banks and SCHIL, as specified in the Annexure 3.
(b) Branches of any other bank as specified by the Reserve Bank of India in this behalf
from time to time.

11. Nomination:

(i) A sole holder or all the joint holders (investors) of a Bond, being individual/s, may nominate in
Form B annexed to this notification (Annexure 4) or as near thereto as may be, one or more
persons who in the event of death of the sole holder/all the joint holders, as the case may be,
would be entitled to the Bonds and to the payment due thereon, provided that the person or each
of the persons nominated is himself/herself is competent to hold the Bond.
(ii) Where the nomination has been made in favour of two or more nominees and either or any of
them dies before such payment becomes due, the title to the Bonds shall vest in the surviving
nominee or nominees and the amount being due thereon shall be paid accordingly.
(iii) In the event of the nominee or nominees predeceasing the holder, the holder may make a fresh
nomination.
(iv) The investor(s) can make separate nomination for each investment.
(v) No nomination shall be made in respect of the Bonds issued in the name of a minor.
(vi) A nomination made by a holder of a Bond can be changed by a fresh nomination in Form B, or as
near there to as may be, or may be cancelled by giving notice in writing to the Receiving Office in
Form C, annexed to the notification (Annexure 5).
(vii) Every nomination and every cancellation or variation shall be registered at the Receiving Office
where the Bond is issued and shall be effective from the date of such registration.

(viii) If the nominee is a minor, the holder of Bonds may appoint any person to receive the Bonds/
amount due in the event of his / her / their death during the period the nominee is a minor.

12. Transferability:

The Bonds held to the credit of Bonds Ledger Account of an investor shall not be transferable.

13. Interest:

(i) The Bonds will be issued in ‘Cumulative’ or ‘Non-cumulative’ form, at the option of investor and
will bear interest at the rate of 7.75% per annum.
(ii) Interest on non-cumulative Bonds will be payable at half-yearly intervals from the date of issue
in terms of paragraph 7 above and interest on cumulative Bonds will be compounded with halfyearly
rests and will be payable on maturity along with the principal.
(iii) In the latter case, the maturity value of the Bonds shall be ` 1,703.00 (being principal and
interest) for every ` 1,000/-(Nominal).
(iv) Interest to the holders opting for non-cumulative Bonds will be paid from date of issue in terms
of paragraph 7 above up to 31st July / 31st January as the case may be, and thereafter half-yearly
for period ending 31st July and 31st January on 1st August and 1st February.
(v) Interest on Bonds held to the credit of Bonds Ledger Account of an investor will be paid,
electronically by credit to bank account of the holder as per the option exercised by the investor/
holder.

14. Tax Deduction at Source

(i) Tax will be deducted at source while making payment of interest on the Non-Cumulative Bonds
from time to time and credited to Government Account.
(ii) Tax on the interest portion of the maturity value will be deducted at source at the time of payment of the
maturity proceeds on the Cumulative Bonds and credited to Government Account.
Provided that tax will not be deducted while making payment of interest/ maturity proceeds, as the
case may be, to individual/s who have made a declaration in the application form that they have
obtained exemption from tax under the relevant provisions of the Income Tax Act, 1961 and have
submitted a true copy of the certificate obtained from Income Tax Authorities.

15. Advances/ Tradability against Bonds

The Bonds shall not be tradable in the secondary market and shall not be eligible as collateral for
availing loans from banks, financial Institutions and Non-Banking Financial Companies.

16. Repayment

(i) The Bonds shall be repayable on the expiration of 7 years from the date of issue.
(ii) Premature encashment in respect of the Bonds shall be allowed for individual investors in the age
group of 60 years and above, subject to submission of document relating to date of birth of the
investor in support of age to the satisfaction of the issuing bank, after minimum lock in period
from the date of issue as indicated below:

(a) Lock in period for investors in the age bracket of 60 to 70 years shall be 6 years from the date
of issue.
(b) Lock in period for investors in the age bracket of 70 to 80 years shall be 5 years from the date
of issue.
(c) Lock in period for investors in the age of 80 years and above shall be 4 years from the date of
issue.

(iii) In case of joint holders or more than two holders of the Bond, the above lock in period will be
applicable even if any one of the holders fulfills the above conditions of eligibility.
(iv) After aforesaid minimum lock in period from the date of issue an eligible investor can surrender
the bonds at any time after the 12th, 10th and 8th half year corresponding to the respective lock in
period but redemption payment will be made on the following interest payment due date. Thus, the
effective date of premature encashment for eligible investors will be 1st August and 1st February
every year. However, 50% of interest due and payable for the last six months of the holding period
will be recovered in such cases, both in respect of Cumulative and Non-cumulative bonds.

17. Brokerage:

Brokerage at the rate of Rs 1.00 per Rs 100 will be paid to the brokers registered with the Receiving
Offices, as listed in paragraph 10 above, on the applications tendered by them and bearing their stamp,
on behalf of their clients.

By Order of the President of India,
[F. No.F.4(28)-B(W&M)/2017]
PRASHANT GOYAL, Jt. Secy. (Budget)

Annexure 1
Form TBX

ANNEXURE 1
Form TBY

ANNEXURE – 2

APPLICATION FORM FOR 7.75% Savings (Taxable) Bonds, 2018

H.U.F. DECLARATION FORM

[Refer to Annexure 2 – Form A (See para 9)]

ANNEXURE – 4
(FORM – B)
[See Para 11(i)]
7.75% Savings (Taxable) Bonds, 2018
FORM OF NOMINATION

Annexure 3
List of Receiving Offices handling 7.75% Savings (Taxable) Bonds, 2018

ANNEXURE – 4
(FORM – B)
[See Para 11(i)]
7.75% Savings (Taxable) Bonds, 2018
FORM OF NOMINATION

ANNEXURE – 5
(FORM – C)
[See Para 11(vi)]
7.75% Savings (Taxable) Bonds, 2018
NOTICE OF CANCELLATION OF NOMINATION

 

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