Tax Free Yields

Tax Free Bonds

Secure fixed income without any tax liability. Explore premium tax-free bonds issued by government-backed enterprises like PFC, IRFC, and NHAI online.

100% Tax-Exempt Interest

Under Section 10(15) of the Income Tax Act, coupon interest earned is fully exempt from income taxes.

Ideal for High Tax Slab

Highly profitable for individuals in the 30% slab, as it completely bypasses standard TDS and tax deductions.

Sovereign PSU Safety

Issued by core public sector undertakings (PSUs) carrying high AAA credit safety profiles.

Section 10(15)

Post-Tax Yield Comparison

For a taxpayer in the 30% slab, a regular bank FD offering 7% interest yields only ~4.9% post-tax. A tax-free PSU bond offering 6% yields a flat 6% post-tax return, delivering far superior income.

✔ No Tax Deducted at Source (TDS)
✔ Long-term maturity structures (10-20 years)
✔ Tradable on BSE & NSE secondary platforms

PSU Issuers

Top Tax-Free Bond Issuers

These bonds are offered by premier public enterprises looking to raise funds for infrastructure development:

Indian Railway Finance Corporation (IRFC): Raises funding for expansion, rolling stock acquisition, and double-tracking lines.
Rural Electrification Corporation (REC): Directs capital to power grid setups, rural electrification, and grid modernization.
Power Finance Corporation (PFC): Core financier for major power generation and distribution projects across India.
National Highways Authority of India (NHAI): Finances highway corridors, flyovers, and arterial highway bypass infrastructure.

FAQs

Tax Free Bonds FAQs

Find immediate answers regarding tax-free PSU bonds.

What are tax-free bonds?

Tax-free bonds are debt security instruments issued by government-backed public sector enterprises (PSUs). Under Section 10(15) of the Income Tax Act, the interest earned from these bonds is completely exempt from income tax, making them highly tax-friendly.

Who should invest in tax-free bonds?

Tax-free bonds are highly recommended for retail investors, high-net-worth individuals (HNIs), and senior citizens who fall into the higher income tax brackets (20% or 30% slab) because they earn tax-exempt interest margins that beat the post-tax yields of bank FDs.

Can I sell tax-free bonds before maturity?

Yes, tax-free bonds are listed on the NSE and BSE stock exchanges. You can sell them in the secondary market using a Demat account before their maturity (which typically ranges from 10 to 20 years), subject to trading volume liquidity.