Tax free bonds

Hey Josh,

Interest earned on tax free bonds are totally exempt from any tax liability as the name suggests "TAX FREE BONDS". But there is only one situation where individuals find themselves in a spot where there is an element of taxability that creeps into the entire instrument. This could be on account of the capital gains that are earned on the bonds.

So, no amount of interest on tax free bond is taxable, rather there can be an element of capital gain at the time of sale of the bonds which would be taxable at the specified rate.

Thanking You

Regarding making of any investment in these securities or bonds or FDs is up to you. If you find something better than this, than go for that, otherwise its also a good option.

Thanks arpit for your response.

Regarding capital gains will be applicable if the bonds are sold within a year and profit(interest earned) made but the bonds are held say for 2-3 years then the capital gains may not be applicable , is my understanding is right ? 

Thanks

Josh