Best tax free bonds at present | Fusion - WeRIndia

To get a tax-free income in India, tax-free bonds are the best bet. Since interest rates are falling in the economy, many of these bonds have risen to a price well above their original cost. However, that should not turn attention away from these bonds.

For any individual in the highest tax bracket, these bonds offer much better yields. Therefore, these are seven tax-free bonds to consider for tax-free income.

Currently, the Indian Railways Finance Corporation is offering an interest rate of 8% on its tax-free bonds, which are issued at ₹ 1,000 and are trading at ₹ 1,134. Although the returns are dependent on the price at which the bond is bought, these bonds definitely offer better yields to those in the highest tax bracket.

The HUDCO N2 bonds are also excellent for those in the highest tax bracket. Due to a rise in price, the yields have dropped, but they still have good coupon rates. They are offered at an interest rate of 8.2% and are currently trading at ₹ 1,183.

The HUDCO N3 bonds are very similar to the HUDCO N2 bonds, but the HUDCO N3 bonds only have a coupon rate of 8.1%. Currently, these bonds are priced at ₹ 1,110.

The bonds of the National Highways Authority of India (or NHAI) are very secure, since they are owned by the government. Additionally, this means that there are no worries on defaults, and the bonds are also AAA rated. They have a coupon rate of 8.2% and are currently priced at ₹ 1,165.

The bonds of the Rural Electrification Corporation (or REC) have an interest rate of 8.46% and are currently priced at ₹ 1,200. They also offer a coupon or interest rate in excess of 8%. Since the interest is tax-free, this is definitely an excellent bond to consider.

The tax-free bonds of the Indian Railways N7 Series have a better coupon rate than many tax-free bonds, at 8.23%. They are currently priced on the National Stock Exchange at ₹ 1,136.

The bonds of the National Highways Authority N6 series are being traded at a fairly high price of ₹ 1,210, but they have an excellent coupon rate of 7.06%.

Currently, the bonds are priced at ₹ 1,080.

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