Who should invest?
1. High tax bracket investors: if you’re in the 30 percent slab, tax-free bonds are your secret sauce. The higher your tax liability, the brighter these bonds shine.
2. Senior citizens: with predictable cash flows and near-zero default risk (most issuers are AAA-rated), they’re ideal for retirees prioritising capital preservation.
3. Portfolio diversifiers: even aggressive equity investors benefit by balancing volatility with steady, tax-smart income.
Action Plan
With the Reserve Bank of India’s (RBI’s) rate-cut cycle gaining momentum and finite supply in the secondary market, delaying could mean paying steeper premiums later. Here’s a potential action plan:
1. Assess your tax bracket: if you’re above 20 percent, tax-free bonds merit serious consideration.
2. Screen bonds: filter by issuer rating (AAA), maturity (10-15 years), and YTM using SEBI-registered platforms.
3. Consult an advisor: align purchases with broader goals — retirement, education, or legacy planning.