The interest on the bond is paid half-yearly. The servicing of the Interest will be done through the bank account provided in the Application form or through the A/c linked to de-mat, as the case may be.
The Bonds shall be eligible for trading on a date notified by the Reserve Bank of India. (It may be noted that only bonds held in demat form with depositories can be traded in stock exchanges)
Pre-mature redemption of the Bond is permitted from 5th year on the interest payment dates
The request for pre-mature redemption shall be submitted to the RO or Depository at least 10 days before the due date of interest payment date.
Interest Amount: Taxable as per his/her income tax slab. TDS is not applicable on the interest amount. However, it is the responsibility of the bondholder to comply with the tax laws.
Capital Gains arising on redemption at Maturity: Not taxable
Long term Capital Gains arising on sale of bond ( After 5th Year): Taxable @20% after indexation benefits