Bharat Bond ETF is the first corporate debt ETF of India. By investing in Bharat Bond ETF, you can own public sector bonds with no hassles.
How does Bharat Bond ETFs work?
Bond ETFs raise funds from investors and invest the money in public sector bonds for a fixed tenure. Finally, as the tenure is over, investors receive the investment amount with returns.
The ETF units are listed on stock exchanges, and investors can easily buy or sell units through their Demat account. If you don’t have a Demat account, you can invest in the Bharat Bond ETF through the Fund of Funds offer.
Benefits of investing in Bharat Bond ETF
There are several benefits of investing in Bharat Bond ETFs, like:
Higher safety: These ETFs ensure higher safety as the money gets invested in the public sector bonds.
Stable returns: You can earn stable and tax-efficient returns until the maturity period.
Lower cost: Fund gets managed at a lower cost of 0.0005% p.a.
No lock-ins: You can buy/sell the units during the trading hours.
Investing in Bharat Bond ETF
Bharat Bond ETF has a fixed maturity date, and it is a diverse portfolio of several companies’ bonds, operating in varying public sectors. Bharat Bond ETF endeavours to hold bonds until maturity, aiming to ensure a stable and predictable return.
There are three ways available for investing in Bharat Bond ETF, which are as follows:
You can invest in it during the New Fund Offer (NFO) period, also known as a primary market for it. 25% of this ETF reserves for the retail investors, and the rest 75% is for other categories.
After the end of the NFO period, bonds get listed over the exchanges and traded like other ETFs. You can buy/sell these ETFs during market hours using a Demat account.
If you want to invest in this ETF and do not have a Demat account and, you can invest using the funds of fund offer.
Taxation in Bharat Bond ETF
Bharat Bond ETF is treated like a non-equity mutual fund for taxation purposes. If you sell ETF units after three years from the investment date, you will be charged at a 20% rate for gains after providing the inflation indexation’s benefits.
If you sell ETF units within three years from the investment date, the entire gained amount adds up to your income and is taxed according to the applicable tax slab rate.
You do not have to pay any tax if you continue holding the units.
Dividends add up to the investor’s income and are taxed according to the investor’s tax slab. Furthermore, if your dividend income exceeds Rs. 5,000 in any financial year, the fund house also deducts a rate of 10% before the dividend’s distribution.
Please consult your financial advisor before investing in Bharat Bond ETF.