One must understand the tax implications of investing in bonds giving higher returns and below are 4 reasons that why one should consider investing in tax free bonds as given below:
- High liquidity: Listing on National Exchanges (NSE or BSE or both) ensure that they can be traded in easily
- No risk: Tax free bonds issued by Public Sector Units (PSUs) usually come with the highest credit ratings of 'AAA' or more
- Returns are tax-free: Returns are not part of taxable income for the entire tenure of the Bond
- Stable Interest income: Tax Free Bonds offer stable interest income when the bank interest rates fluctuate.
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