The GOI Savings Bonds

Government of India has announced to launch of 7.15% Savings (Taxable) Bonds, 2020 commencing from July 01, 2020 to enable resident citizens/HUF to invest in a taxable bond, without any monetary ceiling.  The main features of the Bonds are:

What’s on offer

Any individual or Hindu Undivided Family (HUF) can invest in these, but non-resident Indians (NRIs) cannot. The face value of 1 bond is Rs100 and at least 10 bonds can be bought. There is no upper limit. Each bond provides a return of 7.15% per annum, with a maturity period of 7 years. There are two options—cumulative and non-cumulative—to choose for interest payout. In the non-cumulative option, interest will be paid on half-yearly basis. In the cumulative option, interest is paid at the end of maturity period and a Rs1,000 investment would return Rs1,703.

The lock-in of 7 years is relaxed a bit for senior citizens, For those between 60 and 70 years, it would be 6 years, for those between 70 and 80 it is 5 years and will be 4 years for those above 80. Once the lock-in is over, senior citizens can liquidate their investment if they want to.

Eligibility for Investment:

The Bonds may be held by –

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

  1. in his or her individual capacity, or
  2. in individual capacity on joint basis, or
  3. in individual capacity on any one or survivor basis, or
  4. on behalf of a minor as father/mother/legal guardian.

(ii) a Hindu Undivided Family.

Limit of Investment:

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

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.

Issue Price:

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

(ii) The Bonds will be issued for a minimum amount of  1,000 (face value) and in multiples thereof. Accordingly, the issue price will be  1,000 for every 1,000 (Nominal) face value.


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


  1. The Bonds will be issued in ‘Cumulative’ or ‘Non-cumulative’ form, at the option of investor and will bear interest at the rate of 7.15% per annum.
  2. 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 half-yearly rests and will be payable on maturity along with the principal.
  3. In the latter case, the maturity value of the Bonds shall be  1,703.00 (being principal and interest) for every  1,000/-(Nominal).
  4. 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.
  5. 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.


(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:

  1. Lock in period for investors in the age bracket of 60 to 70 years shall be 6 years from the date of issue.
  2. Lock in period for investors in the age bracket of 70 to 80 years shall be 5 years from the date of issue.
  3. 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.

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