Bond refers to a security issued by a company, financial institution or government which offers regular or fixed payment of interest in return for borrowed money for a certain period of time.

Government of India 8% Savings (Taxable) Bonds, 2003

The salient features of the Bond are as follows:

Eligibility for Investment

The Bonds may be held by:

  • An individual, not being a Non-Resident Indian (NRI)
  • in his or her individual capacity, or
  • in an individual capacity on joint basis, or
  • in an individual capacity on anyone or survivor basis, or
  • on behalf of a minor as father/mother/legal guardian

  • A Hindu Undivided Family.

  • Charitable Institution' to mean a Company registered under Section 25 of the Indian Companies Act 1956 or
  • An institution which has obtained a Certificate of Registration as a charitable institution in accordance with a law in force; or
  • Any institution which has obtained a certificate from Income Tax Authority for the purpose of Section 80G of the Income Tax Act, 1961.

  • A university established or incorporated by a Central, State or Provincial Act, and includes an institution declared under section 3 of the UGC Act, 1956 (3 of 1956), to be a university for the purposes of that Act.

Limit of Investment

There is no maximum limit for investment in the Bonds.

Tax Treatment

  • Income-Tax: Interest on the Bonds will be taxable under the Income-Tax Act, 1961 as applicable according to the relevant tax status of the bond holder.
  • Wealth Tax: The Bonds will be exempt from Wealth-tax under the Wealth- Tax Act, 1957.


A sole holder or a sole surviving holder of a Bond, being an individual, may nominate in form B (Annex – 4) or as near thereto as may be, one or more persons who shall be entitled to the Bond and the payment thereon in the event of his / her death.


The Bond in the form of Bond Ledger Account shall not be transferable.


  • The bond will be issued in cumulative and non-cumulative form, at the option of the investor.
  • The Bond will bear interest at the rate of 8% per annum. Interest on non-cumulative bonds will be payable at half-yearly intervals from the date of issue. Interest on cumulative bonds will be compounded with half-yearly rests and will be payable on maturity along with the principal.

Advances / Tradeability against Bonds

The Bonds shall not be tradeable in the secondary market and shall not be eligible as collateral for loans from banks, financial Institutions and Non Banking Financial Companies, (NBFC) etc.


The Bonds shall be repayable on the expiry of 6 (Six) years from the date of issue. No interest would accrue after the maturity of the Bond.