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The market has been flooded with a spate of bond issues in recent times. Several companies such as IDFC, L&T infra, IFCI, REC, PTC Financial Services, HUDCO, IRFC, NHAI have lured us into parking our money with them by offering attractive interest rates.
Although the 'tax benefit' aspect of these issues has been the scoring point, did you know that all these offers do not carry the same benefit? While the 'tax-free' nature of the bonds was the highlight of those like HUDCO or NHAI or IRFC , the other issuers concentrated on the 'tax-savings' that their bonds would enable.
Yes, in both cases post-tax yields are much superior compared to most other debt instruments.
But there stops the similarity between them.
A 'tax-saving' bond is one in which the initial investment is exempt from tax.
Similar to the deduction you get from your total income for your PPF investments or for paying your daughter's school fees under...