7.7% IREDA Tax Free Bonds Jan 2016 Review

IREDA Tax Free Bonds Jan 2016IREDA Tax Free Bonds Jan 2016 Review

IREDA Tax Free Bonds of 2016 would open for subscription on 8th January, 2016. These tax free bonds offer 7.74% interest rates for 15 year bond. It comes with 10, 15 and 20 years tenure. These are safest investment options as these are issued by Govt. enterprise. In this article, I would review about IREDA Tax Free Bonds Jan 2016, its features and whether one can invest in these tax free bonds or not?

Overview about IREDA

Indian Renewal Energy Development Agency (IREDA) is systematically important non deposit taking NBFC. It was promoted to develop and extend financial assistance for renewable energy and energy efficiency projects.

IREDA Tax Free Bonds Jan 2016 – Features

  • Issue would start on 8th January, 2016
  • Issue ends on 22nd January, 2016
  • These tax free bonds are priced at Rs 1,000 per unit.
  • An investor should invest for atleast 5 bonds. Minimum investment is Rs 5,000.
  • Interest rates for 10 Years is 7.53%, 15 year bond is – 7.74% and 20 year bond is – 7.68%
  • NRI’s cannot apply for these tax free bonds.
  • HNI Retail investors (> Rs 10 lakhs investment) would get 0.25% less interest. So if you want 0.25% higher interest, limit your investments to less than Rs 10 Lakhs.
  • Interest on these tax free bonds are paid every year based on the record date.
  • Since interest is tax free, no TDS would be deducted.
  • These bonds would be listed on Bombay Stock Exchange (BSE).
  • An investor can apply these bonds in paper form or demat form.

Positives of IREDA Tax Free Bonds Jan 2016

  • Highest tax free interest of over 7.7% for 15 year bond.
  • Highest safety as these tax free bonds are issued by Govt. of India enterprise.
  • Good for 30% and 20% tax bracket individuals. Currently bank FD schemes are offering 8% pre tax returns. After tax, it would be hardly 5.3% to 6.4% based on individual tax bracket.
  • These tax free bonds are rated by IRRPL and ICRA rated as AA+ which indicates highest safety /  safety outlook.

How you can invest in these IREDA Tax Free Bonds Jan 2016?

If you already have a demat account, it is very simple. Login to your demat and trading account and purchase them through your bonds section. However, you can even apply on physical form by filling simple application and attaching a cheque. You can visit Edelweisspartners.com website for more details about applying in paper form.

Should you invest in IREDA Tax Free Bonds Jan 2016

There are several positive factors in this tax free bond. You would get highest tax free interest. It is almost zero risk. Good for high tax bracket individuals. However, your amount would get locked for 10/15/20 years. Though you can take in demat form and can sell them on BSE, bond price would fluctuate based on the demand. Means, your bond price of Rs 1,000, you may sell at Rs 950 or at Rs 1,050 based on demand. If you are long term investor and in high tax bracket and looking for high safety, these tax free bonds are good for you.

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IREDA Tax Free Bonds Jan 2016

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