8% Savings Bonds Can Now be Encashed Prematurely

Holders of 8% Savings (Taxable) Bond of the government will be allowed to encash the bonds prematurely based on certain conditions. Recent notification from the Finance Ministry has amended provisions to accommodate the change.

8% Savings Bond was introduced by the government in 2003. The bonds are taxable and have maturity of 6 years. Interest of 8% is paid on a half yearly basis. It can be cumulated or enchased depending on the bond holders choice. Individuals, HUFs, charitable institutions and universities can buy these bonds.

With the new provisions individuals over 60 years are allowed to encash the bonds prematurely, subject to minimum lock-in period as tabulated below:


Lock-in period

60-70 years

5 years

70-80 years

4 years

80 years

3 years

Individuals will have to submit document for proof of date of birth. In case of joint holders one of the bond holders would have to fulfill eligibility condition. Redemption payment will be made on interest payment date of the next half year, i.e. on 1st October or 1st April of the year.

Premature enchashment of 8% Savings Bond will mean losing 50% interest due of the previous 6 months. Interest on these bonds is taxable according to tax slab of the individual and attracts TDS as well.

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