Q.1153 Investing in 7.75%

government bonds from USA

Question: I have been told by my relative in India that govt of india has just issued saving bond paying 7.75% interest. I am located in New Jersey and want to know how to buy this bond. My USA bank does pays very very low or no interest and i want to put some money in india also to earn income Please give me correct method to buy bonds in India from USA thanks for info Answer: Your relative in India is probably referring to the Government of India 7.75% savings bonds 2018. However, NRIs are not eligible to invest in these bonds. Since you are in New Jersey and I presume a non-resident, you may not be allowed to invest in these bonds. For those who are eligible to invest in such government of India bonds, here is some information: • Investing in these bonds is safe as they are backed by the government of India • These bonds have a maturity of seven years. [The earlier bonds had a maturity of only six years] • Rate of Interest is 7.75%, payable semi- annually. These bonds are available in either cumulative or non-cumulative mode. o Cumulative mode: Principal and Interest paid on maturity. o Non-Cumulative mode: Interest paid every six months for seven years and at time of maturity the principal amount is paid. • Individuals and Hindu Undivided Family (HUF) can invest in such bonds. NRIs cannot invest in these bonds • Interest income on these bonds will be taxable [as per the persons tax slab rate] • Investment can be done through banks and brokers