Fixed income is one that we are all familiar with and it hardly needs an introduction. It is the periodic income that is received at regular intervals and remains unchanged. It is secure and is what most people have been doing for years together.
It is ideal for those looking for capital protection and receiving a token income on regular intervals. Senior citizens often pick this form of investment because its high rate of interest suits their requirements well. You can deposit from anything between 6 months -10 years. In addition, you can get tax-free income, if you have invested through tax free bonds.
There are multitudinous choice of products in the offering – Company Fixed Deposits, NCDs, Bonds and Capital Gain Bonds (Section 54EC). The investments are paperless in the case of most fixed income products.
Corporate fixed deposits are tools used by companies to raise money. Through these, companies raise money from the public and offer a fixed rate of interest for different tenures.
Under Section 54EC of Income Tax, 1961, an investor need not pay tax on any long-term capital gains arising on sale of any asset, if the amount of capital gains is invested in specified bonds.
If you are looking to invest in fixed and high interest rate products, for a particular period of time then NCDs are just the thing for you. It has a certain degree of risks involved, which can be brought down severely by investing in NCDs of high-rating companies.
Bonds are debt securities allotted by governments and corporations.