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Government of India has recently announced about the Taxable floating rate savings bond, 2020 with current interest rate of 7.15% reset every six months (0.35% above prevailing NSC rate). From 1st of July 2020 this will come in to the effect. This will enable the resident of India and the HUF to get the benefits of this taxable bond without any upper limit of investment.

There are several important features of this Floating rate savings bond of this year 2020. Therefore, let’s try to understand some of the important features of these bonds to get a better insight about this.

Eligibility for the investment

Investments can be done by any individuals who are the citizen of India and also for those who have the joint holdings. There are certain eligibility parameters that an individual must follow in order to receive the benefits of this bond.

  1. An individual must be the citizen and the resident of India.
  2. They must possess the capacity for investment in the bonds.
  3. The investment may be done on the basis of individual or on joint basis.
  4. Investment is also eligible on the basis of the survivor of the individual.
  5. The investment can be done on behalf of the father, mother, or as a minor guardian.
  6. An individual may be from HUF
  7. NRI are not allowed to make any investments in this bond.

Interest rate (Floating)

The floating interest rate of the bonds will be paid on a semi- annual basis on 1st January to 1st July every year. The option for cumulative interest payment in not available. The first interest payment @ 7.15% on 1st January 2021.

The Interest rate will be 35 bps or 0.35% above the NSC interest rates. The rate of interest will be reset after every six months. ( example current NSC rate 6.80 + 0.35 = 7.15%)


The Tenure for the investment is 7 years from the date of Issue of bond

For Sr. Citizens with age between 60 to 70 years, tenure will be 6 years from the date of Issue

For Sr. Citizens with age between 70 to 80 years, tenure will be 5 years from the date of Issue

For Sr. Citizens above 80 years of age, tenure will be 4 years from the date of Issue

In case of Joint ownership, the eligibility will considered for any one of the holders.

Issue Price

The bonds can be issued at par of Rs 100.

The minimum amount of Rs 1000 is important to issue a bond. The issue price may change from 1000 for every face value of Rs 1000

Date of Issue

From the date of tender of the cash in the form realization of draft ,cheque or funds and in the electronic form the Bond Ledger account will be credited or can be issued.


Interest received on Bonds are taxable as per Income Tax act 1961 and TDS will be deducted while payment of interest unless specified for not deducting tax in the form while applying.

Investment Limit

While there is no limit to the investment in this bond. However, investment in cash form is restricted to Rs. 20,000 only. Any investment above Rs.20,000 need to be done in the form of Cheque or draft or electronic transfer.


The bonds cannot be transferred to anyone expect in case of death of the bond holder death to his nominee or to his legal heir.

Tradability and advances

These bonds cannot be traded in the secondary market and are not eligible for any kind of collateral loans from the market.


The nomination will be done in the name of the sole holder or the survivor of the bond holder.

How to Apply

  1. Application can be done in the physical form or by electronic form with the applicants name, amount to be invested and the address of the applicants must be clearly stated.
  2. Necessary payment in the form of cash is required in the application process valuing upto Rs 20000. It can be done in the form of draft, cheque and electronic transfer.
  3. Applicants who have received the exemptions under the income tax act 1961 should submit the truer copy that they have received from the income tax authorities.
  4. The form of bond ledger account from various designated branches of various nationalized banks of India like SBI, HDFC, Axis Bank, IDBI bank and ICICI bank ltd.

Form of bonds

The bonds will be issued in the form of electronic mode  in the name of the account holder of the BLA account where his name is listed in the receiving office.

  1. In the name of the credit holder of the account the bond will be issued only in the electronic form. And it may also be opened with the receiving office.
  2. The bonds are issued on the credit of the Bond Ledger Account (BLA) of the investor and can be accepted by any number of branches of the receiving office that is being authorized by reserve bank of India.
  3. The certificate of the issue will be issued on the holders bond as a proof of the subscription.

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