Tax free bonds

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

12 December 2013 Once a retail investor sells or transfers Tax Free-bonds which have been originally allotted at issue, interest rate will fall marginally—i.e. the buyer will earn 50 bps (basis points) less. Thus, the higher rate of interest, applicable to retail investors, would not be available in case the bonds are transferred, except in case of transfer to legal heir in event of death of the original investor ,So if some one purchase from secondary market coupon rate is reduced by 50 BPS?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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12 December 2013 As I understand, that depends upon the prescribed terms of issue.
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Logically, if the terms of issue prescribes for reduction of rate of interest on transfer of the bonds by the original holder, then rate may be reduced as the bonds comes to another person.
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The litreture of the issue must be read which can be found easily on the net
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