Government bonds, in particular, are a secure investment option issued by the government to raise funds for various projects and day-to-day operations
Non-Resident Indians (NRIs) have limited options for investing in India, but some safe and rewarding choices are available. When it comes to investments offered by the Government of India or the Reserve Bank of India (RBI), NRIs can consider them with confidence. Government bonds, in particular, are a secure investment option issued by the government to raise funds for various projects and day-to-day operations.
HERE ARE SEVEN INDIAN GOVERNMENT BOND OPTIONS THAT NRIS CAN EXPLORE:
Public Sector Unit (PSU) and Capital Bonds:
These bonds are tax-free, and the interest earned on them is also tax-free under section 10 (15) (IV) (h) of the Income Tax (IT) Act. However, the investment itself does not come under tax exemption. By investing in capital gains bonds, under section 54EC, NRIs can claim an exemption. It is essential to ensure that the lock-in period for these bonds is three years.
Secure Corporate Bonds and Non-Convertible Debentures (NCDs):
Issued by companies or corporations, these bonds have tenures ranging from 1 to 20 years. The notable advantage of these bonds is their tradability, allowing investors to trade them in different markets.
Government Tax-free NRI Bonds:
Similar to capital gain bonds, these bonds do not offer tax exemptions. However, investors can claim a deduction on the interest under section 10 (15) (IV) (h).
Debt Mutual Funds:
Debt Mutual Funds provide NRIs with a fixed rate of interest. After submitting the Foreign Account Tax Compliance Act (FATCA) declaration, NRIs can invest in these funds using their Non-Resident Ordinary (NRO) Account or Non-Resident External (NRE) Account.
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Before investing in any of these options, NRIs should carefully assess their financial goals, risk tolerance, and investment horizon
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It is advisable to consult with a financial advisor to make well-informed decisions and maximize returns while minimizing risks
Zero-Coupon Bonds:
With Zero-Coupon Bonds, investors purchase bonds at a significant discount from the issuer and receive a profitable return upon maturity. The difference between the selling price and face value determines the return.
RBI NRI Bonds:
NRIs can invest in G-sec (Government of India Securities) bonds issued by the RBI for the long-term. The tenure for these bonds varies from 5 to 40 years, and the interest rate depends on the locking period, ranging from 6.18% to 7.72%.
Bharat Bond ETF or FOF:
NRIs can consider Bharat Bond ETF (Exchange Traded Fund) and FOF (Funds of Funds) investments, which are regarded as safe options. These are tradable debt ETFs or bonds issued by government agencies and public sector companies, offering low-cost investments with attractive returns.
Before investing in any of these options, NRIs should carefully assess their financial goals, risk tolerance, and investment horizon. It is advisable to consult with a financial advisor to make well-informed decisions and maximize returns while minimizing risks. Happy investing!
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