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Yield (% Return)

This is indicative % returns on your bond investments

Balance tenure

Time period after which your initial investment is paid back

Interest payment frequency

Time period between two interest payments on your bond

Credit rating

This shows the safety of the issuer. Higher the rating - safer the bond

Tax Free Bonds

Tax Free Bonds are a great investment for investors who are looking for relatively safe long term investment options that help earn fixed and regular higher income as well as save taxes on such interest income.

No Tax Free Bonds Found

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MAHINDRA AND MAHINDRA FINANCIAL SERVICES LIMITED

Coupon

8.2500%

Maturity

Mar 2027

Rating

Ind-Ra  AAA

Type of Bond

Secured - Regular Bond/Debenture

Yield

8.1000%

Price

₹ 1,02,164.12

TATA CAPITAL LIMITED

Coupon

8.0980%

Maturity

Jan 2027

Rating

CRISIL  AAA

Type of Bond

Secured - Regular Bond/Debenture

Yield

8.0700%

Price

₹ 1,03,175.07

HDFC BANK LIMITED

Coupon

8.4600%

Maturity

Jun 2026

Rating

ICRA  AAA

Type of Bond

Unsecured - Regular Bond/Debenture

Yield

8.0000%

Price

₹ 1,07,97,465.90

KOTAK MAHINDRA INVESTMENTS LIMITED

Coupon

8.3721%

Maturity

Aug 2027

Rating

ICRA  AAA

Type of Bond

Secured - Regular Bond/Debenture

Yield

8.1500%

Price

₹ 1,01,346.68

NEOGROWTH CREDIT PRIVATE LIMITED

Coupon

12.5500%

Maturity

Aug 2025

Rating

ICRA  BBB+

Type of Bond

Secured - Regular Bond/Debenture

Yield

12.0000%

Price

₹ 1,01,236.52

SATYA MICROCAPITAL LIMITED

Coupon

13.8500%

Maturity

Jul 2029

Rating

CRISIL  BBB+

Type of Bond

Subordinate Debt

Yield

14.7562%

Price

₹ 1,00,265.62

EARLYSALARY SERVICES PRIVATE LIMITED

Coupon

11.7500%

Maturity

Dec 2025

Rating

CARE  BBB+

Type of Bond

Secured - Regular Bond/Debenture

Yield

12.2701%

Price

₹ 1,00,772.60

NEOGROWTH CREDIT PRIVATE LIMITED

Coupon

12.5500%

Maturity

Aug 2025

Rating

ICRA  BBB+

Type of Bond

Secured - Regular Bond/Debenture

Yield

12.0000%

Price

₹ 1,01,236.52

INDIABULLS HOUSING FINANCE LIMITED

Coupon

8.8500%

Maturity

Sep 2026

Rating

CRISIL  AA

Type of Bond

Secured - Regular Bond/Debenture

Yield

11.7500%

Price

₹ 989.99

ESAF SMALL FINANCE BANK LIMITED

Coupon

11.0000%

Maturity

Apr 2030

Rating

CARE  A

Type of Bond

Subordinate Debt Tier 2 - Lower

Yield

11.3500%

Price

₹ 1,00,653.41

KERALA INFRASTRUCTURE INVESTMENT FUND BOARD

Coupon

8.9500%

Maturity

Dec 2031

Rating

ACUITE  AA(CE)

Type of Bond

State Guaranteed Bond (SLU)

Yield

9.2472%

Price

₹ 1,00,684.70

KERALA INFRASTRUCTURE INVESTMENT FUND BOARD

Coupon

8.9500%

Maturity

Dec 2027

Rating

ACUITE  AA(CE)

Type of Bond

State Guaranteed Bond (SLU)

Yield

9.2468%

Price

₹ 1,00,684.70

KERALA INFRASTRUCTURE INVESTMENT FUND BOARD

Coupon

8.9500%

Maturity

Dec 2032

Rating

ACUITE  AA(CE)

Type of Bond

State Guaranteed Bond (SLU)

Yield

9.2465%

Price

₹ 1,00,684.70

KERALA INFRASTRUCTURE INVESTMENT FUND BOARD

Coupon

8.9500%

Maturity

Dec 2030

Rating

ACUITE  AA(CE)

Type of Bond

State Guaranteed Bond (SLU)

Yield

9.2464%

Price

₹ 1,00,684.70

KERALA INFRASTRUCTURE INVESTMENT FUND BOARD

Coupon

8.9500%

Maturity

Dec 2028

Rating

ACUITE  AA(CE)

Type of Bond

State Guaranteed Bond (SLU)

Yield

9.2452%

Price

₹ 1,00,684.70

ESAF SMALL FINANCE BANK LIMITED

Coupon

11.0000%

Maturity

Apr 2030

Rating

CARE  A

Type of Bond

Subordinate Debt Tier 2 - Lower

Yield

11.3500%

Price

₹ 1,00,653.41

YES BANK LIMITED

Coupon

9.0000%

Maturity

Mar 2026

Rating

CARE  A

Type of Bond

Subordinate Debt Tier 2

Yield

9.5000%

Price

₹ 9,95,504.78

YES BANK LIMITED

Coupon

9.1500%

Maturity

Jun 2025

Rating

CARE  A

Type of Bond

Subordinate Debt Tier 2

Yield

9.4000%

Price

₹ 10,70,080.00

YES BANK LIMITED

Coupon

8.8500%

Maturity

Feb 2025

Rating

CARE  A

Type of Bond

Unsecured - Regular Bond/Debenture

Yield

9.2500%

Price

₹ 10,08,529.57

HDFC BANK LIMITED

Coupon

8.4600%

Maturity

Jun 2026

Rating

ICRA  AAA

Type of Bond

Unsecured - Regular Bond/Debenture

Yield

8.0000%

Price

₹ 1,07,97,465.90

NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT

Coupon

7.5700%

Maturity

Mar 2026

Rating

Ind-Ra  AAA

Type of Bond

Unsecured - Regular Bond/Debenture

Yield

7.5577%

Price

₹ 1,00,642.93

REC LIMITED

Coupon

7.6000%

Maturity

Feb 2026

Rating

CRISIL  AAA

Type of Bond

Unsecured - Regular Bond/Debenture

Yield

7.5500%

Price

₹ 1,01,093.22

RURAL ELECTRIFICATION CORPORATION LIMITED

Coupon

7.5600%

Maturity

Jun 2026

Rating

CRISIL  AAA

Type of Bond

Unsecured - Regular Bond/Debenture

Yield

7.5271%

Price

₹ 1,06,089.42

POWER FINANCE CORPORATION LIMITED

Coupon

7.4200%

Maturity

Sep 2032

Rating

ICRA  AAA

Type of Bond

Unsecured - Regular Bond/Debenture

Yield

7.3700%

Price

₹ 10,47,484.02

POWER FINANCE CORPORATION LIMITED

Coupon

7.5500%

Maturity

Aug 2038

Rating

ICRA  AAA

Type of Bond

Secured - Regular Bond/Debenture

Yield

7.3600%

Price

₹ 1,069.53

HARYANA

Coupon

6.8600%

Maturity

Nov 2026

Rating

Sovereign

Type of Bond

State Development Loan

Yield

7.4000%

Price

₹ 101.52

SATYA MICROCAPITAL LIMITED

Coupon

13.8500%

Maturity

Jul 2029

Rating

CRISIL  BBB+

Type of Bond

Subordinate Debt

Yield

14.7562%

Price

₹ 1,00,265.62

NEOGROWTH CREDIT PRIVATE LIMITED

Coupon

12.5500%

Maturity

Aug 2025

Rating

ICRA  BBB+

Type of Bond

Secured - Regular Bond/Debenture

Yield

12.0000%

Price

₹ 1,01,236.52

SPANDANA SPHOORTY FINANCIAL LIMITED

Coupon

10.7500%

Maturity

Mar 2025

Rating

Ind-Ra  A

Type of Bond

Secured - Regular Bond/Debenture

Yield

11.2957%

Price

₹ 1,00,382.88

SPANDANA SPHOORTY FINANCIAL LIMITED

Coupon

10.7500%

Maturity

Sep 2025

Rating

Ind-Ra  A

Type of Bond

Secured - Regular Bond/Debenture

Yield

11.2949%

Price

₹ 1,00,382.88

MAS FINANCIAL SERVICES LIMITED

Coupon

10.7500%

Maturity

Jul 2029

Rating

CARE  AA-

Type of Bond

Subordinate Debt

Yield

11.2900%

Price

₹ 1,00,559.59

Note: Pursuant to the provisions of Section 193 of Income Tax Act, 1961, as amended, with effect from, 1st April 2023, TDS will be deducted @ 10% on any interest payable on any security issued by a company (i.e. securities other than securities issued by the Central Government or a State Government). The listing of products above should not be considered an endorsement or recommendation to invest. Please use your own discretion before you transact. The listed products and their price or yield are subject to availability and market cutoff times.

Features of Tax Free Bonds

Long tenor: These bonds typically have a tenure of 10, 15 and 20 years.

Tax free interest income: When you invest in Tax Free Bonds Tax is exempted on the income earned as interest

Government incorporated entities: The entities issuing these bonds are generally government enterprises which means they are government backed and therefore have close to zero risk of default.

Eligibility criteria: The general eligibility criteria to apply to these bonds are as follows :
Retail Individual Investors (RIIs) – this includes both HUFs and NRIs
Qualified Institutional Buyers (QIBs)
National Highway Authority of India (NHAI)
Corporates
High Net worth Individuals (HNI)
Investors can browse through the detailed explanation on the eligibility by downloading the offer document of issaunces on IndiaBonds.

Lower coupon : Typically, the interest earned/yield on Tax Free Bonds are slightly lower in comparison to other types of bonds. However, the effective returns may be higher since the interest income earned is tax exempt. This would typically appeal, as a useful investment alternative to investors who reside in higher tax brackets of around 20 to 30% and are looking to earn tax saving income.

Who Issues Tax Free Bonds?

Tax Free Bonds are issued by entities that are backed or set up and incorporated by the government for projects that will eventually help build the nation. For example, power finance corporation ltd would issue Tax Free Bonds in India in order to finance, facilitate and promote power sector development. Similarly, issuance may be done for other objectives such as provide finance to infrastructure projects or help with housing and urban development projects.

Here are some of the common issuers of Tax Free Bonds in India:
1. National Highway Authority of India (NHAI)
2. Power Finance Corporation Limited (PFC)
3. Indian Infrastructure Finance Company Limited (IIFCL)
4. Housing and Urban Development Corporation Limited (HUDCO)
5. Indian Renewable Energy Development Agency Limited (IREDA)
6. Rural Electrification Corporation Limited (REC)
7. National Housing Bank (NHB)
8. NHPC Limited (formerly known as National Hydroelectric Power Corporation Ltd.)
9. NTPC Limited (formerly known as National Thermal Power Corporation)

More about Tax Free Bonds

Tax Free Bonds as the name suggests are bonds whose interest income is entirely tax free for the investors under Section 10 (15)(iv)(h) of the Income Tax Act.

These Bonds are issued by entities that are backed by the government and are therefore have very low risk of default making them a relatively safer investment option. Tax Free Bonds can thus help investors earn more in comparison to other investment options such as fixed deposits.

Benefits of Tax Free Bonds

Assured and regular income

Tax Free Bonds help investors earn regular fixed income. The interest payout frequency is annual.

Safe and secure

Since the government holds majority stake in these companies the likelihood of such entities going bust is quite low.

Easily tradeable

While the tenor for these bonds may go upto 20 years, in case investors are looking to exit these instruments they can sell their holding in the secondary market/stock exchanges as these are listed bonds. If the price of the bond increases, then investors can also earn higher returns because of the profitable transaction. However, it’s important to note the profit on sale of such bonds will attract capital gains tax. If sold within a year the capital gains you accrue will be taxable as per your income tax slab. If sold after a year long term capital gains tax is applicable at 10% without indexation.

Beneficial for investors in higher tax brackets

Investors falling in higher tax slabs can invest in these instruments to earn tax free interest income.

What is the Procedure to buy Tax Free Bonds?You can invest in Tax Free Bonds either through a Bond Public Issue when the Bond first enters the market or trade the existing bonds in the market through the secondary market via stock exchanges. Invest with ease in Tax Free Bonds through IndiaBonds

Signup

To purchase Tax Free Bonds online, The first step is to sign up on Indiabonds.com

1

Complete KYC

Complete your KYC online in less than 3 mins! There is no need to complete any paperwork or make any uploads.

2

Browse Curated Packs

Browse the curated packs and select Tax Free Bonds on the explore Page to view a variety of Tax Free Bonds for investments

3

Pick your choice

Pick your choice of Tax Free Bonds from a curated list of Tax Free Bonds on our website.

4

Get detailed reports

Click Read more to get detailed issue reports like interest payment frequency and to calculate your investment as against the final payout.

5

Click on "Buy this Bond"

Click on “Buy this Bond” and submit your details. The Bond Managers will help you with the rest. That’s about it.

6

Connect with your Bond Managers

In case you are not sure how to invest in Tax Free Bonds, you can reach out to our Bond Managers who will help you buy Tax Free Bonds online

7

Click on "Buy this Bond"

Click on “Buy this Bond” and submit your details. The Bond Managers will help you with the rest. That’s about it.

6

Connect with your Bond Managers

In case you are not sure how to invest in Tax Free Bonds, you can reach out to our Bond Managers who will help you buy Tax Free Bonds online

7

Frequently Asked Questions

How do you redeem Tax Free Bonds?

The steps to redeem Tax Free Bonds is quite simple the bond can be traded in the secondary market/stock exchanges. Investors looking to exit their investments can sell their bonds through the secondary markets. If held till maturity, the issuer repays the principal at redemption
It’s important to note that any profits made on selling these bonds are taxable. If you sell these bonds within a year of holding them the profits will be taxable as per the income tax bracket you reside in. In case investors sell the bonds after 1 year the profits will attract long term capital gains tax at 10% without indexation.

Who are the issuers of Tax Free Bonds?

Issuers of Tax Free Bonds are usually entities that have been incorporated by the government or government enterprises. These entities are established to work on projects that will help build the nation and benefit the people and could be associated with infrastructure, electrification program, housing development etc. These companies usually have their stakes owned directly by the president of India. A few examples of tax free bond issuers are as follows: National Highway Authority of India (NHAI), Power finance Corporation Limited (PFC), Indian Infrastructure Finance Company Limited (IIFCL), Housing and Urban Development Corporation Limited (HUDCO)

Are Tax Free Bonds a safe investment option?

Bonds in general are a relatively safer investment option in comparison to other choices like stocks etc. To top that since Tax Free Bonds are issued by government enterprises, it makes these investments have quite a low probability to default.. As a result, Tax Free Bonds can therefore be considered a relatively safer investment option for investors who are looking for long term fixed income investment option.

How to invest in Tax Free Bonds?

Tax Free Bonds can be purchased from the primary market where investors buy these bonds from the entity directly, where it is issued for the first time. The other way to invest in Tax Free Bonds is through Secondary markets. Since Tax Free Bonds have not been issued since 2016 investors can look to invest through secondary markets. Browse through Tax Free Bonds online on IndiaBonds and get access to detailed bond information.