Today is the last day to subscribe for the new series of Bharat Bond - April 2032. Here's why I have invested more than ₹10 Crores in #BharatBond🧵
- More than 7.5% Yield - which no established bank in India offers for FD.
- FD Interest is taxable just like your salary income. Returns from Bharat Bond are subject to FAR less taxes. (2/n)
- FD Interest is taxable just like your salary income. Returns from Bharat Bond are subject to FAR less taxes. (2/n)
Reason:
- You receive Interest on your FD every quarter, which adds to your income for that FY
- Bharat Bond interest gets added to the Net Asset Value, and released only at the end of the series. Hence this is Capital Appreciation. (3/n)
- You receive Interest on your FD every quarter, which adds to your income for that FY
- Bharat Bond interest gets added to the Net Asset Value, and released only at the end of the series. Hence this is Capital Appreciation. (3/n)
At the end of the series, all the accrued interest will be released (along with principal) and you have to pay Capital Gains tax in that FY.
However, the gamechanger is that you have to pay tax not on the entire gains, but the gains after considering INDEXATION benefit. (4/n)
However, the gamechanger is that you have to pay tax not on the entire gains, but the gains after considering INDEXATION benefit. (4/n)
#Indexation is a whole other topic. Basically Indexation alters the BUY price of Bond according to inflation. This example will give you an idea of how much tax you can save:
If you bought a Bond in FY14-15 for ₹10 Lakhs with 7.5% yield, today you will get ₹16.5L (5/n)
If you bought a Bond in FY14-15 for ₹10 Lakhs with 7.5% yield, today you will get ₹16.5L (5/n)
Indexation will adjust the cost price from ₹10L to ₹13.2L (approx.)
which means your Capital Gain = 16.5L - 13.2L = ₹3.3L
So you have to pay Capital Gains tax on ₹3.3 Lakhs only. (6/n)
which means your Capital Gain = 16.5L - 13.2L = ₹3.3L
So you have to pay Capital Gains tax on ₹3.3 Lakhs only. (6/n)
But that's not the reason I invest in Bharat Bond. Why I do it:
You can pledge Bharat Bond to get trading limit. So I get 7.5% interest on one side, and another 20-30% easily through #Options Trading with the trading limit
You can pledge FD too, but most brokers don't allow it.
You can pledge Bharat Bond to get trading limit. So I get 7.5% interest on one side, and another 20-30% easily through #Options Trading with the trading limit
You can pledge FD too, but most brokers don't allow it.
Few more things:
- 0.6% Expense Ratio (lowest in India)
- Very safe (Investment only in AAA rated Public Sector Bonds)
- Highly liquid. Yes, you may choose to buy or sell Bharat Bond in the secondary market, although returns may vary: <7.5% or >7.5% depending on the economy
(8/n)
- 0.6% Expense Ratio (lowest in India)
- Very safe (Investment only in AAA rated Public Sector Bonds)
- Highly liquid. Yes, you may choose to buy or sell Bharat Bond in the secondary market, although returns may vary: <7.5% or >7.5% depending on the economy
(8/n)
- Buying directly from primary market/fund house (Edelweiss in this case) avoids charges like brokerage, STT, stamp duty, etc.
However, it can take several weeks for NSE to approve it for pledging.
If you purchase older series in secondary market, you can pledge it immediately.
However, it can take several weeks for NSE to approve it for pledging.
If you purchase older series in secondary market, you can pledge it immediately.
Important: As stated earlier, this is not for regular income.
FD Interest gets credited to your account every quarter.
Bharat Bond is similar to real estate. You get the returns only when you sell / hold till maturity.
(10/10)
FD Interest gets credited to your account every quarter.
Bharat Bond is similar to real estate. You get the returns only when you sell / hold till maturity.
(10/10)
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