Can I exit from NHB Tax Free Bond before 10 yrs ?

POSTED BY Amit ON December 30, 2013 5:56 pm COMMENTS (4)


I have query regarding NHB Tax Free Bond. As per the details of the bond, one need to stay invested in this bond for 10 yrs. My question is, can I exit from this bond in between. say after 5 yrs? If yes, then is their any penalty for early exit? What are the conditions / tax rule applicable to me at the time of exit?

Thanks in advance…



4 replies on this article “Can I exit from NHB Tax Free Bond before 10 yrs ?”

  1. Amit says:

    Thanks a lot…

    This means, NHB Tax Free Bonds are good alternative to Bank FD… where returns same as FD and returns is tax free…


  2. ashalanshu says:

    Dear Amit, there is no penalty on you. As you ‘ll be selling it in the market to customers like me, the price may be different than the intrinsic value of the bond. Interest is always tax free. In case of sell on exchanges, there may be Long term Capital Gain to you which you have the option to pay Tax either @ 10.3% with out indexation or 20.6% with indexation.



  3. Amit says:

    Hi Ashal,
    Thanks for your reply.
    Is there any penalty applicable if I exit after 5 yrs or I will get interest at rate applicable for 10 yrs? Also any tax on interest if I exit after 5 yrs?

    Amit Chandane.

  4. ashalanshu says:

    Dear Amit, you can sell your bonds in the retail market after 5Y as and when these are listed.



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