Bonds are a kind of debt instrument. By investing in this type of asset, the investor gives a loan to the issuing entity. The investors will be repaid at the end of the tenure.
There are different kinds of bonds. Those bonds which are exempt from taxation on the interest income under the Income Tax Act, 1961 are called tax-free bonds. These are usually issued by government-backed entities.
Interest earned from investments is often eligible for taxation. However, investors do not have to pay any tax on the interest earned through tax-free bonds. Thus, after-tax returns are higher for the tax-exempt bond. They also have a lower risk of default, as these companies are usually Government-backed entities.
As the interest is Tax Free, investors get higher post tax returns as compared to fixed deposits.
Listing of bonds on various exchanges provides liquidity to your investments.
Option of holding bonds in 'demat form' makes your investments easy to handle and monitor.
Tax-free bonds have emerged as a highly popular investment option among investors.
Here’s a look at some of its benefits:
During the public issue of the bonds, you can invest in them by submitting a physical form furnishing the details as requested. Also, with www.kotaksecurities.com, you can make an investment online and enjoy the ease of investing.
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