When I review my fixed-income choices each year, I come back to one simple idea: predictable income matters. Markets can be noisy, but the interest credited to my account shouldn’t be. That is why I maintain a small but deliberate allocation to tax-free bonds—issues backed by government-owned entities where the annual interest is exempt from income tax under Section 10(15)(iv)(h). In this note, I’m sharing how I approach them, an updated tax free bonds list you can research further, and a practical path to buy bonds online without friction.
Why I still consider tax-free bonds
For investors in higher tax brackets, post-tax return is the number that counts. If a tax-free bond pays 7.3% annually, the pre-tax equivalent for someone in the 30% slab is roughly 10.4%. That differential compounds meaningfully over long tenors. Equally important, most issuers—NHAI, PFC, REC, IRFC, HUDCO—are government-owned, which adds comfort on timely interest payments. Prices will move with interest-rate cycles, but the coupon itself is steady.
Updated tax free bonds list (actively traded legacy issues)
I track the following older series that still change hands on exchanges:
- NHAI (2015) – Coupon ~7.39%, maturity 2035
- PFC (2015) – Coupon ~7.60%, maturity 2035
- REC (2015) – Coupon ~7.14%, maturity 2035
- IRFC (2013) – Coupon ~8.00%, maturity 2033
- HUDCO (2013) – Coupon ~8.10%, maturity 2033
Note: no fresh public issues have come in recent years; availability is via the secondary market. Yields and traded prices vary day-to-day with demand and broader rate expectations. I always check the live price, accrued interest, and clean-price vs. dirty-price difference before placing an order.
How I evaluate before purchase
My quick checklist is simple:
- Tenor fit: Can I hold 8–12 years comfortably? If not, I assume price volatility risk.
- Yield vs. comparables: I compare the tax-free yield with tax-able alternatives (corporate bonds, FDs, debt funds) on a post-tax basis.
- Liquidity: I prefer series with reasonable trading volumes; it reduces impact cost when I need to exit.
- All-in cash outflow: I review settlement amount, including accrued interest, brokerage, and statutory charges.
How to buy bonds online (step-by-step)
The secondary market route is streamlined today. I usually buy bonds online through a regulated bond platform:
- Discover: Search by issuer (NHAI, PFC, REC), coupon, and maturity year.
- Compare: Check live yield, price trend, and recent trades.
- Verify: Confirm ISIN, face value, and whether the coupon is truly tax-free; read the original offer document summary.
- Place order: Use my demat + trading credentials; preview the settlement amount (principal + accrued interest).
- Track: Post-purchase, I monitor coupon credit dates and corporate actions in my portfolio dashboard.
Risks and realities to keep in view
Tax-free does not mean risk-free. Prices can fall if market interest rates rise. Liquidity can be patchy on some series. Also, while the interest is exempt, capital gains from selling before maturity are taxable as per holding period. I treat these bonds as the “stability layer” in my portfolio—not a substitute for emergency funds or short-term goals.
A balanced takeaway
If you value visibility on cash flows and efficient post-tax income, the updated tax free bonds list above is a practical starting set to research. Combine it with the convenience of buy bonds online, and you can add this steady stream to your plan without paperwork overload. My approach is measured: buy at reasonable yields, size the exposure prudently, and hold with a long horizon. In an environment where headlines change faster than financial goals, quiet, tax-efficient coupons arriving on schedule can be a welcome constant.
