FIXED INCOME  PRODUCTS           It Is a Safe Way To InvestÂ
PUBLIC PROVIDENT FUNDÂ Â Â NSC/KVPÂ Â Â BANK DEPOSITSÂ Â CORPORATE DEPOSITS Â CORPORATE BONDSÂ
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FOR LATESTÂ Â BANK DEPOSITÂ INTEREST RATES , CLICK HEREÂ
FOR LATESTÂ Â BANK DEPOSITÂ INTEREST RATES , CLICK HEREÂ
 FOR INTEREST RATES ON ALL SMALL SAVINGS ACCOUNTS    , CLICK HERE   Â
​FOR INCOME TAX NEWS , CLICK HERE        FOR BANKING NEWS  CLICK HERE   FOR NEWS ON IPO , NCD ETC  , CLICK HEREÂ
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​FOR INCOME TAX NEWS , CLICK HERE        FOR BANKING NEWS  CLICK HERE   FOR NEWS ON IPO , NCD ETC  , CLICK HEREÂ
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GOVERNMENT OF INDIA BONDS - A SAFE LONG TERM INVESTMENT
What is Floating Rate ?
It is an investment whose yields change based on a bench mark rate like Repo rate or any other rate fixed by the authorities and which does not change on market movements
FLOATING RATE SAVINGS BOND 2020 ( TAXABLE )
Dated 27.06.2020 :  Reserve bank of India ( RBI ) launched  a new scheme called " Floating Rate Savings Bond 2020 ( Taxable )  2020 yesterday  with effect from July 01, 2020 in terms of GoI Notification F.No.4(10)-B(W&M)/2020 dated June 26, 2020. The scheme  with the backing of Government of India  has following features  . The bonds can be purchased by  Indian Residents and Hindu Undivided Family ( HUF ) . The Bonds shall be repayable on the expiration of 7 (Seven) years from the date of issue. Premature redemption shall be allowed for specified categories of senior citizens.​  There will be no maximum limit for investment in the Bonds.
SALIENT FEATURES : Â Â
 1. The Bonds may be held by -Â
 (i) a person resident in India,  in her or his individual capacity, or in individual capacity on joint basis, or  in individual capacity on any one or survivor basis, or on behalf of a minor as father/mother/legal guardian
(ii) a Hindu Undivided Family Â
2. Subscription - Subscription to the bonds will be in the form of cash (up to ₹20,000/- only)/drafts/cheques or any electronic mode acceptable to the Receiving Office.
3. Form of the Bonds - The Bonds will be issued only in the electronic form and held at the credit of the holder in an account called Bond Ledger Account (BLA), opened with the Receiving Office.
4. Receiving Offices - State Bank of India & 11 Nationalized Banks ,Axis Bank Ltd., ICICI Bank Ltd., HDFC Bank Ltd., IDBI Bank Ltd. Â
5. Transferability - The Bonds held to the credit of Bond Ledger Account (BLA) of an investor shall not be transferable, except transfer to a nominee(s)/legal heir in case of death of the holder of the bonds.
7. Interest (Floating) –  The interest on the bonds will be payable at half yearly intervals on Jan 1st and July 1st every year. There is no option to pay interest on cumulative basis. The coupon rate will be linked/pegged with prevailing National Saving Certificate (NSC) rate with a spread of (+) 35 bps over the respective NSC rate.
The coupon/interest of the bond would be reset half yearly starting with Jan 1st, 2021 and thereafter every July 1st and Jan 1st. The coupon rate for first coupon period, payable on January 1, 2021 is fixed at 7.15%.
SALIENT FEATURES : Â Â
 1. The Bonds may be held by -Â
 (i) a person resident in India,  in her or his individual capacity, or in individual capacity on joint basis, or  in individual capacity on any one or survivor basis, or on behalf of a minor as father/mother/legal guardian
(ii) a Hindu Undivided Family Â
2. Subscription - Subscription to the bonds will be in the form of cash (up to ₹20,000/- only)/drafts/cheques or any electronic mode acceptable to the Receiving Office.
3. Form of the Bonds - The Bonds will be issued only in the electronic form and held at the credit of the holder in an account called Bond Ledger Account (BLA), opened with the Receiving Office.
4. Receiving Offices - State Bank of India & 11 Nationalized Banks ,Axis Bank Ltd., ICICI Bank Ltd., HDFC Bank Ltd., IDBI Bank Ltd. Â
5. Transferability - The Bonds held to the credit of Bond Ledger Account (BLA) of an investor shall not be transferable, except transfer to a nominee(s)/legal heir in case of death of the holder of the bonds.
7. Interest (Floating) –  The interest on the bonds will be payable at half yearly intervals on Jan 1st and July 1st every year. There is no option to pay interest on cumulative basis. The coupon rate will be linked/pegged with prevailing National Saving Certificate (NSC) rate with a spread of (+) 35 bps over the respective NSC rate.
The coupon/interest of the bond would be reset half yearly starting with Jan 1st, 2021 and thereafter every July 1st and Jan 1st. The coupon rate for first coupon period, payable on January 1, 2021 is fixed at 7.15%.
COMPARISON WITH EARLIER SCHEMEÂ Â
​
 Earlier scheme was paying a Fixed Rate of 7.75 % while the present bond is linked to the interest rate of National savings Scheme  and pays 0.35 % above NSC Rate .Â
COMPARISON WITH FIXED DEPOSITS OF Â BANKS Â
​
 In the times when most of the Nationalized  banks are  paying interest rates of 5.75 % to 6.35 % for tenure above 5 years  and future of interest rate looking bleak ,  , the floating rate Bonds  with  present coupon of 7.15 % %  interest will still be interesting to  the investing public .  Once invested , banks pay a fixed agreed rate while F.R bonds change interest rate every half year . Both Fixed deposits of banks and Floating rate Bonds are  taxable  and hence make no difference  with regard to tax ability .  Fixed Deposits of banks offer such facilities as premature closure , loan against deposits  at a nominal additional rate  and  interest option of  monthly , quarterly , half -yearly  , annually   which are not available with Floating rate Bonds .  Â
COMPARISON WITH NSC Â AND KVP Â Â
 While National Savings  Certificates ( NSC ) offer  an interest rate of  6.8 % now , Kisan vikas Patra (  KVP ) is offering  a rate of 6.9 % pa .  .  While  investment in NSC  qualifies for income tax rebate under 80C of Income tax ,  KVP is freely transferable .  While Government bonds  pays  semi annual interest , one has to wait for maturity  for obtaining interest and principal payment in NSC and KVP .Â
In the absence of  various  facilities  available in Banks Fixed Deposits  like premature closing  , NSC  (  incentive under 80c ) and KVP  ( Transfer-ability )  , only those who can afford to lock in their savings  for 7 years and do not look forward for such facilities may look in to  purchase of the bonds which are safest and which yield  a good return of 7.15 % now and linked to NSC rate in future  .Â
For Reserve Bank Notification  on the subject   , CLICK HERE  and for details of GOI scheme ,   CLICK HERE ​
​
 Earlier scheme was paying a Fixed Rate of 7.75 % while the present bond is linked to the interest rate of National savings Scheme  and pays 0.35 % above NSC Rate .Â
COMPARISON WITH FIXED DEPOSITS OF Â BANKS Â
​
 In the times when most of the Nationalized  banks are  paying interest rates of 5.75 % to 6.35 % for tenure above 5 years  and future of interest rate looking bleak ,  , the floating rate Bonds  with  present coupon of 7.15 % %  interest will still be interesting to  the investing public .  Once invested , banks pay a fixed agreed rate while F.R bonds change interest rate every half year . Both Fixed deposits of banks and Floating rate Bonds are  taxable  and hence make no difference  with regard to tax ability .  Fixed Deposits of banks offer such facilities as premature closure , loan against deposits  at a nominal additional rate  and  interest option of  monthly , quarterly , half -yearly  , annually   which are not available with Floating rate Bonds .  Â
COMPARISON WITH NSC Â AND KVP Â Â
 While National Savings  Certificates ( NSC ) offer  an interest rate of  6.8 % now , Kisan vikas Patra (  KVP ) is offering  a rate of 6.9 % pa .  .  While  investment in NSC  qualifies for income tax rebate under 80C of Income tax ,  KVP is freely transferable .  While Government bonds  pays  semi annual interest , one has to wait for maturity  for obtaining interest and principal payment in NSC and KVP .Â
In the absence of  various  facilities  available in Banks Fixed Deposits  like premature closing  , NSC  (  incentive under 80c ) and KVP  ( Transfer-ability )  , only those who can afford to lock in their savings  for 7 years and do not look forward for such facilities may look in to  purchase of the bonds which are safest and which yield  a good return of 7.15 % now and linked to NSC rate in future  .Â
For Reserve Bank Notification  on the subject   , CLICK HERE  and for details of GOI scheme ,   CLICK HERE ​
27.05.2020 : The Union Cabinet  had earlier  in the month  approved  extension of  Pradhan MantriVayaVandanaYojana (PMVVY) up to 31st March, 2023 . Now Life Insurance  Corporation of India  has announced the relaunch of   Pradhan Mantri VayaVandana Yojana ( Modified 2020 ) scheme  and is available for  public to invest  . Â
You may go through the salient features of the plan  by visiting our page  "PRADHANAMANTRI VAYA VANDANA YOJANA ( MODIFIED -2020 ) "  Â
You may go through the salient features of the plan  by visiting our page  "PRADHANAMANTRI VAYA VANDANA YOJANA ( MODIFIED -2020 ) "  Â
  CURTAIN DRAWN TODAY   ON "GOI  7.75% SAVINGS ( TAXABLE ) BONDS 2018 " SCHEMEÂ
28.05.2020 :  Government of India announced the closing of  " GOI  7.75% SAVINGS ( TAXABLE ) BONDS 2018 " effective from close of business as of 28.05.2020 and hence will not be available for investment tomorrow onward . Only applications for investment where funds have been realised by the banks by May 28, 2020 will be processedÂ
​The scheme introduced in 2018 , a watered down version of 2003 scheme , was available for investment for Indian residents  and Hindu Undivided Families ( HUF ) .Â
With the closure of the scheme , now the  general public can get maximum interest of 7.1 % from PPF scheme , 6.9 % from kisan Vikasa Patra scheme and 6.8 % pa from National savings certificate  from the government schemes . Senior citizens can get a maximum of 7.4 % pa from PRADHANAMANTRI VAYA VANDANA YOJANA .Â
​
For RBI Press release dated 27.05.2020 , CLICK HEREÂ
28.05.2020 :  Government of India announced the closing of  " GOI  7.75% SAVINGS ( TAXABLE ) BONDS 2018 " effective from close of business as of 28.05.2020 and hence will not be available for investment tomorrow onward . Only applications for investment where funds have been realised by the banks by May 28, 2020 will be processedÂ
​The scheme introduced in 2018 , a watered down version of 2003 scheme , was available for investment for Indian residents  and Hindu Undivided Families ( HUF ) .Â
With the closure of the scheme , now the  general public can get maximum interest of 7.1 % from PPF scheme , 6.9 % from kisan Vikasa Patra scheme and 6.8 % pa from National savings certificate  from the government schemes . Senior citizens can get a maximum of 7.4 % pa from PRADHANAMANTRI VAYA VANDANA YOJANA .Â
​
For RBI Press release dated 27.05.2020 , CLICK HEREÂ
NEW ARTICLE PUBLISHEDÂ
         TAX PLANNING FOR FY 2022-23 ( AY 2023-24 )Â
Comprehensive  Article on Income tax changes in Rules, Rates , Slabs , Rebates  and EstimationÂ
CLICK HERE TO READÂ
​
         TAX PLANNING FOR FY 2022-23 ( AY 2023-24 )Â
Comprehensive  Article on Income tax changes in Rules, Rates , Slabs , Rebates  and EstimationÂ
CLICK HERE TO READÂ
​
FOR READING ARTICLE  TAX ON RETIREMENT BENEFITS , CLICK HEREÂ
PRECAUTIONS TO BE TAKEN WHILE INVESTING STOCK MARKETS , CLICK HEREÂ
FINANCIAL PLANNING FOR YOUNG  , CLICK HERE ​   HOW TO LINK AADHAR WITH PAN ?  CLICK HERE ​   Â
Compare Fixed Deposit Interest rates offered by various banks before investing Â
                      VISIT :   LATEST BANK DEPOSIT INTEREST RATES - A  COMPARISONÂ
PRECAUTIONS TO BE TAKEN WHILE INVESTING STOCK MARKETS , CLICK HEREÂ
FINANCIAL PLANNING FOR YOUNG  , CLICK HERE ​   HOW TO LINK AADHAR WITH PAN ?  CLICK HERE ​   Â
Compare Fixed Deposit Interest rates offered by various banks before investing Â
                      VISIT :   LATEST BANK DEPOSIT INTEREST RATES - A  COMPARISONÂ
GOI 7.75% SAVINGS ( TAXABLE ) BONDS 2018
 THE SCHEME CLOSES ON 28.05.2020Â
   The 7.75 %  Government of India Savings ( Taxable ) Bonds , 2018 is a Bond issued by Reserve Bank of India  . The scheme  with the backing of Government of India  is launched now in replacement of earlier  8%  Government of India Savings ( Taxable ) Bonds , 2003  . The bonds can be purchased by  Indian Residents and Hindu Undivided Family ( HUF )
SALIENT FEATURES : Â Â
1. Interest rate of 7.75 % pa  with option of non -cumulative and cumalative payments .Â
2. The bonds are issued for a period of 7 years .Â
3.  Interest is taxable   and to be taken to the income of the holder .Â
4. Â Payment of principal can be taken only on maturity and no exit option , except for senior citizens with following conditions :Â
  A. Lock in period of 6 years for those aged between 60 and 70 yearsÂ
  B. Lock in period of 5 years for those aged between 70 and 80 yearsÂ
  A. Lock in period of 4 years for those aged above 80 yearsÂ
5. Bond is neither transferable nor traded in exchanges .Â
6. Non- residents are not eligible to buy .Â
7 . Bonds with a face value of Rs 1,000 can  be purchased unlimited .Â
8.  Half yearly Interest will be paid on  1st August  / 1st February  every year for non - cumulative option .Â
9 . Cumulative amount of Rs 1,703 will be paid at the end of 7 years for  cumulative option .Â
​10 . The bonds will be issued and held in the form of " Bond Ledger Account "  by RBI . Â
11. The bonds are available for sale at Branches of State Bank of India , Nationalised Banks , 3 private sector banks and SCHIL .Â
COMPARISON WITH EARLIER SCHEMEÂ Â
​
 In the times when most of the banks are  paying interest rates of 6.25 % to 7.25 %   and future of interest rate looking bleak ,  , the GOI Bonds  with 8 %  interest had rekindled interest  by  the investing public .  However the new scheme is dampener as interest rate is reduced from 8 % to 7.75 &  with increase of  repayment period from 6 years to 7 yearsÂ
COMPARISON WITH FIXED DEPOSITS OF Â BANKS Â
​
 In the times when most of the banks are  paying interest rates of 6.25 % to 7.25 %   and future of interest rate looking bleak ,  , the GOI Bonds  with 7.75 %  interest will still be interesting to  the investing public .  Both Fixed deposits of banks and GOI Bonds are  taxable  and hence make no difference  with regard to tax ability .  Fixed Deposits of banks offer such facilities as premature closure , loan against deposits  at a nominal additional rate  and  interest option of  monthly , quarterly , half -yearly  , annually   which are not available with GOI Bonds .  Â
COMPARISON WITH NSC Â AND KVP Â Â
 While National Savings  Certificates ( NSC ) offer  an interest rate of  7.6% now , Kisan vikas Patra (  KVP ) is offering  a rate of  7.3% pa .  NSC mature in 5 years while KVP  matures in 115 MONTHS  .  While  investment in NSC  qualifies for income tax rebate under 80C of Income tax ,  KVP is freely transferable .  While Government bonds  pays  semi annual interest , one has to wait for maturity  for obtaining interest and principal payment in NSC and KVP .Â
In the absence of  various  facilities  available in Banks Fixed Deposits  like premature closing  , NSC  (  incentive under 80c ) and KVP  ( Transfer-ability )  , only those who can afford to lock in their savings  for 7 years and do not look forward for such facilities may look in to  purchase of the bonds which are safest and which yield  a good return of 7.75 %  in the present times  compared with other safe channels available  .Â
For Reserve Bank Notification  on the subject   , CLICK HERE
SALIENT FEATURES : Â Â
1. Interest rate of 7.75 % pa  with option of non -cumulative and cumalative payments .Â
2. The bonds are issued for a period of 7 years .Â
3.  Interest is taxable   and to be taken to the income of the holder .Â
4. Â Payment of principal can be taken only on maturity and no exit option , except for senior citizens with following conditions :Â
  A. Lock in period of 6 years for those aged between 60 and 70 yearsÂ
  B. Lock in period of 5 years for those aged between 70 and 80 yearsÂ
  A. Lock in period of 4 years for those aged above 80 yearsÂ
5. Bond is neither transferable nor traded in exchanges .Â
6. Non- residents are not eligible to buy .Â
7 . Bonds with a face value of Rs 1,000 can  be purchased unlimited .Â
8.  Half yearly Interest will be paid on  1st August  / 1st February  every year for non - cumulative option .Â
9 . Cumulative amount of Rs 1,703 will be paid at the end of 7 years for  cumulative option .Â
​10 . The bonds will be issued and held in the form of " Bond Ledger Account "  by RBI . Â
11. The bonds are available for sale at Branches of State Bank of India , Nationalised Banks , 3 private sector banks and SCHIL .Â
COMPARISON WITH EARLIER SCHEMEÂ Â
​
 In the times when most of the banks are  paying interest rates of 6.25 % to 7.25 %   and future of interest rate looking bleak ,  , the GOI Bonds  with 8 %  interest had rekindled interest  by  the investing public .  However the new scheme is dampener as interest rate is reduced from 8 % to 7.75 &  with increase of  repayment period from 6 years to 7 yearsÂ
COMPARISON WITH FIXED DEPOSITS OF Â BANKS Â
​
 In the times when most of the banks are  paying interest rates of 6.25 % to 7.25 %   and future of interest rate looking bleak ,  , the GOI Bonds  with 7.75 %  interest will still be interesting to  the investing public .  Both Fixed deposits of banks and GOI Bonds are  taxable  and hence make no difference  with regard to tax ability .  Fixed Deposits of banks offer such facilities as premature closure , loan against deposits  at a nominal additional rate  and  interest option of  monthly , quarterly , half -yearly  , annually   which are not available with GOI Bonds .  Â
COMPARISON WITH NSC Â AND KVP Â Â
 While National Savings  Certificates ( NSC ) offer  an interest rate of  7.6% now , Kisan vikas Patra (  KVP ) is offering  a rate of  7.3% pa .  NSC mature in 5 years while KVP  matures in 115 MONTHS  .  While  investment in NSC  qualifies for income tax rebate under 80C of Income tax ,  KVP is freely transferable .  While Government bonds  pays  semi annual interest , one has to wait for maturity  for obtaining interest and principal payment in NSC and KVP .Â
In the absence of  various  facilities  available in Banks Fixed Deposits  like premature closing  , NSC  (  incentive under 80c ) and KVP  ( Transfer-ability )  , only those who can afford to lock in their savings  for 7 years and do not look forward for such facilities may look in to  purchase of the bonds which are safest and which yield  a good return of 7.75 %  in the present times  compared with other safe channels available  .Â
For Reserve Bank Notification  on the subject   , CLICK HERE
Government of India has closed its subscription effective from close of January 2 , 2018  (​For RBI notification on this regard , CLICK HERE  ) . The scheme is no more available .for investment .Â
 The 8%  Government of India Savings ( Taxable ) Bonds , 2003 Â
 The 8%  Government of India Savings ( Taxable ) Bonds , 2003  is a Bond issued by Reserve Bank of India  . The scheme  with the backing of Government of India  was launched in 2003 . The bonds can be purchased by  Indian Residents , HUF ,  charitable institutions  and UniversitiesÂ
SALIENT FEATURES : Â Â
1. Interest rate of 8 % pa  with option of non -cumulative and cumalative payments .Â
2. The bonds are issued for a period of 6 years .Â
3.  Interest is taxable   and to be taken to the income of the holder .Â
4. Â Payment of principal can be taken only on maturity and no exit option .Â
5. Bond is neither transferable nor traded in exchanges .Â
6. Non- residents are not eligible to buy .Â
7 . Bonds with a face value of Rs 1,000 can  be purchased unlimited .Â
8.  Half yearly Interest will be paid on  1st August  / 1st February  every year for non - cumulative option .Â
9 . Cumulative amount of Rs 1,601  will be paid at the end of 6 years for  cumulative option .Â
​10 . The bonds will be issued and held in the form of " Bond Ledger Account "  by RBI .Â
COMPARISON WITH FIXED DEPOSITS OF Â BANKS Â
​
 In the times when most of the banks are  paying interest rates of 6.25 % to 7.25 %   and future of interest rate looking bleak ,  , the GOI Bonds  with 8 %  interest have rekindled interest  by  the investing public .  Both Fixed deposits of banks and GOI Bonds are  taxable  and hence make no difference  with regard to tax ability .  Fixed Deposits of banks offer such facilities as premature closure , loan against deposits  at a nominal additional rate  and  interest option of  monthly , quarterly , half -yearly  , annually   which are not available with GOI Bonds .  Â
COMPARISON WITH NSC Â AND KVP Â Â
 While National Savings  Certificates ( NSC ) offer  an interest rate of  7.8% now , Kisan vikas Patra (  KVP ) is offering  a rate of  7.5% pa .  NSC mature in 5 years while KVP  matures in 115 MONTHS  .  While  investment in NSC  qualifies for income tax rebate under 80C of Income tax ,  KVP is freely transferable .  While Government bonds  pays  semi annual interest , one has to wait for maturity  for obtaining interest and principal payment in NSC and KVP .Â
 In the absence of  various  facilities  available in Banks Fixed Deposits  like premature closing ,NSC  (  incentive under 80c ) and KVP  ( Transfer-ability )  , only those who can afford to lock in their savings  for 6 years and do not look forward for such facilities may look in to  purchase of the bonds which are safest and which yield  a good return of 8 %  in the present times  compared with other safe channels available  .Â
For Reserve Bank Notification  on the subject   , CLICK HEREÂ
SALIENT FEATURES : Â Â
1. Interest rate of 8 % pa  with option of non -cumulative and cumalative payments .Â
2. The bonds are issued for a period of 6 years .Â
3.  Interest is taxable   and to be taken to the income of the holder .Â
4. Â Payment of principal can be taken only on maturity and no exit option .Â
5. Bond is neither transferable nor traded in exchanges .Â
6. Non- residents are not eligible to buy .Â
7 . Bonds with a face value of Rs 1,000 can  be purchased unlimited .Â
8.  Half yearly Interest will be paid on  1st August  / 1st February  every year for non - cumulative option .Â
9 . Cumulative amount of Rs 1,601  will be paid at the end of 6 years for  cumulative option .Â
​10 . The bonds will be issued and held in the form of " Bond Ledger Account "  by RBI .Â
COMPARISON WITH FIXED DEPOSITS OF Â BANKS Â
​
 In the times when most of the banks are  paying interest rates of 6.25 % to 7.25 %   and future of interest rate looking bleak ,  , the GOI Bonds  with 8 %  interest have rekindled interest  by  the investing public .  Both Fixed deposits of banks and GOI Bonds are  taxable  and hence make no difference  with regard to tax ability .  Fixed Deposits of banks offer such facilities as premature closure , loan against deposits  at a nominal additional rate  and  interest option of  monthly , quarterly , half -yearly  , annually   which are not available with GOI Bonds .  Â
COMPARISON WITH NSC Â AND KVP Â Â
 While National Savings  Certificates ( NSC ) offer  an interest rate of  7.8% now , Kisan vikas Patra (  KVP ) is offering  a rate of  7.5% pa .  NSC mature in 5 years while KVP  matures in 115 MONTHS  .  While  investment in NSC  qualifies for income tax rebate under 80C of Income tax ,  KVP is freely transferable .  While Government bonds  pays  semi annual interest , one has to wait for maturity  for obtaining interest and principal payment in NSC and KVP .Â
 In the absence of  various  facilities  available in Banks Fixed Deposits  like premature closing ,NSC  (  incentive under 80c ) and KVP  ( Transfer-ability )  , only those who can afford to lock in their savings  for 6 years and do not look forward for such facilities may look in to  purchase of the bonds which are safest and which yield  a good return of 8 %  in the present times  compared with other safe channels available  .Â
For Reserve Bank Notification  on the subject   , CLICK HEREÂ
Comparison with earlier plans  :Â
Th new plan when compared with earlier ones looks like watered down version . Similar plans were announced by the Governments in 2003 and 2014  & 2017 .While earlier plans carried 9%  interest  & 8 % annually , present scheme carries only 7.4 % . Earlier plans allowed life time subscription while present plan restricts for 10 years . Earlier plans had lock in period of 15 years while one has to lock in for 10 years only in new plan . Â
Comparison with  other Fixed deposits products available now : Â
Â
Presently all government sponsored savings schemes are offering less than 8 % of interest .  Sukanya Samriddhi Account  is offering  7.6 % which is not suitable for senior citizens .  Senior Citizen Scheme ( SCS ) of Government of India  is fetching 7.4 %   which is  of same yield as Vayo Vandana Scheme . Most of the reputed banks are also offering  their interest rates  around 6.25 % to  6.7 %  for senior citizens and 0.5 % less to general public .  Only exception is small finance banks which are  paying up to 9 % pa .  The 7.75 % Government of India Savings ( Taxable ) Bonds , 2018  Bond issued by Reserve Bank of India is fetching 7.75 % pa , but  the scheme ends on 28.05.2020 . Hence compared  small savings and bank deposits ,   the plan  fares fairly well in the matter of interest rate . If one is income tax assessee , the real interest earned will come down . Â
 Some Non- Convertible debentures ( NCD )  offer higher interest rates , but fraught with higher risks which may not be suitable for senior citizens  .  Some  debt mutual funds  have been returning  the investors with  higher returns , but one has to lock in 3 years to get tax advantage .Â
In the scenario of  falling interest rates ,Fixing the interest income  for next 10 years  looks attractive especially for small investors who do not come under tax bracket , even though the plan  has no  tax concession or insurance coverage .However in the present economic conditions , a maximum Rs 5,000 pension may make little in managing a household  and one has to look for other income revenues to sustain .Â
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Further information and policy documents are available in LIC website which can be accessed by   CLICKING HERE  and for buying the same on- line , visit  LIC'S WEBSITEÂ
Th new plan when compared with earlier ones looks like watered down version . Similar plans were announced by the Governments in 2003 and 2014  & 2017 .While earlier plans carried 9%  interest  & 8 % annually , present scheme carries only 7.4 % . Earlier plans allowed life time subscription while present plan restricts for 10 years . Earlier plans had lock in period of 15 years while one has to lock in for 10 years only in new plan . Â
Comparison with  other Fixed deposits products available now : Â
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Presently all government sponsored savings schemes are offering less than 8 % of interest .  Sukanya Samriddhi Account  is offering  7.6 % which is not suitable for senior citizens .  Senior Citizen Scheme ( SCS ) of Government of India  is fetching 7.4 %   which is  of same yield as Vayo Vandana Scheme . Most of the reputed banks are also offering  their interest rates  around 6.25 % to  6.7 %  for senior citizens and 0.5 % less to general public .  Only exception is small finance banks which are  paying up to 9 % pa .  The 7.75 % Government of India Savings ( Taxable ) Bonds , 2018  Bond issued by Reserve Bank of India is fetching 7.75 % pa , but  the scheme ends on 28.05.2020 . Hence compared  small savings and bank deposits ,   the plan  fares fairly well in the matter of interest rate . If one is income tax assessee , the real interest earned will come down . Â
 Some Non- Convertible debentures ( NCD )  offer higher interest rates , but fraught with higher risks which may not be suitable for senior citizens  .  Some  debt mutual funds  have been returning  the investors with  higher returns , but one has to lock in 3 years to get tax advantage .Â
In the scenario of  falling interest rates ,Fixing the interest income  for next 10 years  looks attractive especially for small investors who do not come under tax bracket , even though the plan  has no  tax concession or insurance coverage .However in the present economic conditions , a maximum Rs 5,000 pension may make little in managing a household  and one has to look for other income revenues to sustain .Â
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Further information and policy documents are available in LIC website which can be accessed by   CLICKING HERE  and for buying the same on- line , visit  LIC'S WEBSITEÂ
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TO ESTIMATE YOUR CURRENT YEAR TAX LIABILITY Â AND REBATES YOU CAN UTILISEÂ Â Â Â
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