Sunday, October 16, 2011


What is an HUF? 
Down the ages, the Hindu community has largely believed in the concept of joint families, joint income and joint property that is shared and enjoyed by all the members of the family. This concept is now recognized as a legal expression in the form of the Hindu Undivided Family (HUF)– a rather efficient tax-planning tool under the Income Tax Act. 

How do you form HUF? As the name suggests, an HUF is a family of Hindus. However, under the tax laws, even Jain and Sikh families can set up HUFs. Typically, an HUF will consist of a person who have lineally descended from a common ancestor, and includes their wives and unmarried daughters. Do note: in Maharashtra, even married daughters are recognised as HUF members. 
While the senior most member is called the karta (manager), the male members are known as coparceners, and the females are referred to as members. In the ordinary sense, an HUF should consist of at least two male members. However, in case the HUF is partitioned, the smaller family that receives the property can constitute an HUF even if it has only one male member. 

What income is regarded as HUF income? All the income that arises on the utilisation of the HUF’s assets and on the investment of its funds is regarded as the HUF’s income that is assessed separately and chargeable to tax. Importantly, the income should have been earned using HUF property or funds or property only; if it arises on account of the personal investments of any member, it will generally be regarded as the individual income of the member. 
 If an HUF contributes funds to the capital of a partnership firm in which it is represented by the karta or any other member who represents the HUF, then the profits and interest received from the firm will be treated as HUF income. This is because the income arises on the investment of HUF funds, and so the income belongs to the family. If, however, the partnership firm also pays the karta (or the member who represents the HUF) a salary for efforts put in by him, the remuneration will be regarded as the individual income of the karta/member. 
It’s important to remember that the same person can be taxed separately as an individual, as well as for and on behalf of the HUF. The two capacities are totally different. And so, the individual and the HUF are totally different units for tax purposes–they are two different assessees. 
Since an HUF is a separately entity, it can earn income from house property, income from business and capital gains, and income from other sources. However, since emoluments are given for personal skills, an HUF cannot earn income from salaries. An HUF can also carry on a business that is managed on its behalf by the karta. It can also hold shares, securities, jewellery and any other valuable articles or articles, apart from movable and immovable property. 

What are the assets of an HUF? Any gift that is given specifically to an HUF can be treated as HUF property. The assets received on the partition of a larger HUF of which the coparcener was a member is also perceived as HUF property is also treated as the property of the HUF. 
Assets can also be bequeathed to an HUF by way of a will that specifically favours the HUF. A point to be noted: in the absence of a will, the assets received on the death of a benefactor after 1956 (when the Hindu Succession Act came into force) will not be regarded as HUF property, but as individual property, even though such assets have been inherited. 

Saturday, October 15, 2011


For those who travel abroad frequently either due to personal or professional reason have to carry foreign exchange with them for using it during their stay outside the country. Most of the people carry currency notes with them which is fraught with various risks. But if you want to avoid the risk of travelling while carrying currency notes , you may seriously consider taking forex cards given by the banks for this purpose. 

What is Forex Card? Forex card is a plastic based card like a debit card or credit card, which is prepaid in nature. The person taking the card can get the desired amount in the desired currency loaded on the card which can be subsequently utilised while on tour. The person needs to approach the bank and pay in Indian rupees for the equivalent amount in foreign currency which needs to be loaded on the card.

Who issues Forex Card? Most of the to league banks in India do offer forex cards to their customers. One can approach bank like ICICI, SBI, HDFC etc for forex cards.

What are the charges? You may have to pay issuance fee of Rs 100-300 for every forex card that you take. Other than this , you may have to pay RS 50-200 as loading fee while loading the card with the desired foreign currency. You may have to pay 1.5% - 3% on ATM cash withdrawal too.

How much forex can you load on your card? As per current RBI regulations, one can load upto maximum of USD 10000 across all forex cards in a year.

Can I have multiple forex cards? Yes. You can have multiple cards for loading cash in different currencies viz USD, Pound,, Euro etc. 

Whats the exchange rate applicable on my spend? You will be charged the exchanged rate of the day when you got the card loaded with the desired currency. The conversion rate is applicable on the day when the rupee is converted in foreign currency which in this case is the day of loading the card in India.

Documents Required ? You will have to give PAN Card copy, Passport,Visa and tickets .

Benefits of the card? Following are the benefits of the card
1. This card will provide you immunity against the risk of physical loss of cash while travelling.
2. It allows you to control the exchange rate applicable . You can choose when to load the card depending on the exchange rate movement. Once loaded, you are not exposed to any adverse movement in currency exchange rate. 
3. Accepted  across all major stores and ATM abroad.
4. Add on benefits like travel insurance and accident insurance being offered by some Banks.

Tuesday, October 11, 2011


For those of us who have Demat Accounts and want to change from one Demat account to another for any reason will have to first get the holdings transferred to the new Demat Account before the account can be closed and you can fully migrate to the new account. So, if you are wondering how can you get the share holdings transferred from your current Demat account to the new one, then read on.
1.Transfer from one Demat Act to another Demat Act of the sole owner :- In case , the transfer of shares is from one Demat account to another Demat account held by the same person in his sole capacity, then he/she needs to fill delivery instruction slip giving the details of the shares to be transferred and the same shall be submitted with the depository. These delivery instruction slips are available with the depository and are like cheque leaves which we use to tranfer money from our account.
2.Transfer from Joint Demat Account :- In this case too, the delivery instruction slip will have to filled and submitted to the depository. Only difference is that here both the owners need to sign the slip.
3.From Sole Demat Account after account holders death:- In such cases the holding is transferred to the demat account of the nominee where there is nominee mentioned in the account. For cases where the holding is less than 1 lakh and there is no nomination in the account, the holdings may be transferred to the legal heir without any court order or will. For cases above Rs 1 lakhs holding without nomination, one will have to give court order or will from the deceased alongwith the death certificate for effecting the transfer.
4. From Joint Demat Account after death of one owner- In this case, the shares will be transferred to the new Demat Account of the surviving holder. The surviving holder will have to submit an application form alongwith death certificate for effecting the transfer.
5.Transfer of Lock in securities:- If the Demat has ELSS etc which has lockin then the transfer can be done only post getting them rematerialised . After rematerialisation, the same can be dematerialised in new Demat account.
6. Transfer of Holding where there is Lien :- For all holdings where there is lien marked , before transferring the same one will need NOC from the party in whose benefit the holding/stock etc is pledged.

Hope this has helped get you some clarity on the issue.

Saturday, October 8, 2011


Till not very long ago, gold or gold jewellery was considered to be most sacred of family possessions in India, and a family would do its all to avoid selling it or  mortgaging gold for taking a loan on it. But, slowly but steadily things are indeed changing in India with many gold loan companies setting up shop and driving home the point that there is nothing wrong in taking loan over gold. One of the gold loan Finance company asks" Jab Ghar me pada hai sona toh phir kyun hai rona?". This has resulted in huge off take in gold loan sales in the country . But does it make sense for you? Do you really understand what it is ? How can you take benefit from it ? Lets try and understand each of these in the following paragraphs.

GOLD LOAN - What is it?
Gold Loan is a loan given against the security of the gold bar/coin or jewellery . The loan seeker needs to mortgage his/her gold with the bank/NBFCs against which they get loans upto 75% to 95% of the gold value. These are like Personal Loans where the end use of the loan amount is not defined and the amount may be used in any manner as deemed fit by the borrower.Since these loans are backed by security of gold , the banks/NBFCs charge much lower rate of interest on these loans as compared to lets say a Personal Loan which is unsecured.
Who Offers These Loans? Most of the banks in India like HDFC Bank, ICICI Bank, Axis,SBI etc offer Gold Loans. Other than banks there are dedicated gold loan companies like Mannapuram Finance, Muthoot Finance which exclusively deal in Gold Loan.Most of the gold loan companies have very wide network and are open on Sundays too,thus making it eminently easy for the borrower to seek loan at his/her convenience.
Loan Amount? Most of the gold loan financers(NBFCS) provide upto 95% of the gold value as loan to the borrower. But if you approach a bank, they are likely to be conservative in their financing and may be willing to offer only upto 75% of the gold value as loan.But to balance that there rate of interest is lower.So you must decide basis that.If you dont want very high loan amount,it may be prudent to approach banks which will give you gold loans at atleast 2-3% lesser than Muthoot Finance, Mannapuram Finance etc.
Benefits of taking Gold Loan? There are quite a number of compelling benefits which make gold loan a very good option for lot of borrowers. Some of the major ones are
1.Quick Loan Disbursal - Gold Loans are probably the loans with smallest TAT(turn around time). You can walkin with your gold coin/bar/jewellery and walk out with loan , all in the smae day in matter of couple of  hours. 
2.Safety and Security of your Jewellery- Since the gold jewellery that the borrower mortgages with the financier is kept in safe custody of the bank/NBFCs , it ensures that the same is in safe and secure custody .This also reduces the cost that the person might be bearing on account of keeping that jewellery in a bank locker on his own. bank Locker rent is thus saved while the jewellery still stays in bank locker only.
3.Lower interest rates - Since these are secured loans, the rate of interest is much lower than a plain vanilla Personal Loan.
4.OD Facility- Some banks also provide overdraft facility on your gold jewellery. This helps those who dont want to take EMI based loans and want to just have facility of overdraft where they pay interest for only usage period .
So next time when you are in urgent need of money , then rather than going for Personal Loan, you may want to consider unlocking the value of gold jewellery in your home .

Thursday, October 6, 2011


Its not uncommon to find people among us who have suffered at the hands of the mediclaim insurers during claim settlement. There are numerous instances where claim is rejected by the health insurance company on technical/material grounds.  This defeats the basis purpose of getting help when needed. So, what can you do to avoid this? Try these steps :- 
1. Check Fine Print for Expense Coverage - The mediclaim polices generally list down the limit of expenditure that is allowed to reimbursed under room rent/ambulance hire charges etc. This  limit varies between policies of various companies and hence before you get yourself admitted to any hospital , it is always advisable to check the expense limit allowed as per your mediclaim .Any extra expenditure done on account of thee heads is generally borne by the patient himself/herself.
 2. Check for exclusion in Diseases - You must also check the number and nature of diseases covered under your mediclaim before you buy it. For example, lot of policies in India dont cover Diabetes at all . This is a major exclusion since Diabetes is very common among Indians and by excluding it the insurer is playing safe. You must select the policy which provides coverage for maximum number of diseases especially the  critical one like Diabetes, Heart related, Kidney Related, cancer related etc. 
3. Time Period Before Coverage of Preexisting Disease- Most of the mediclaim policies in India, have a waiting period of anywhere between 1 to 4 years before they cover preexisting diseases.Any claim made for the preexisting disease during the waiting period is likely to be rejected.Hence go for the plan which has least waiting period. 
4. Plastic Surgery , Cataract, Dental Care and Piles Not Covered - Most of the mediclaim policies in India DONOT cover Dental Care, Piles, Cataract etc . Even Plastic Surgery is considered to be part of cosmetic surgery and as such is seldom covered under mediclaim. .
 5. OPD Not Covered - Any claim that you may have on account of expenses towards medicines /Doctor consultancy Charges etc during OPD care is not covered by most of the mediclaim plan in India. 
6. Disclose all Material Info - To avoid rejection of any claim made by you which is normally covered under the plan, it is also important for you to have disclosed all material information to the insurer while applying/buying the cover. If the firm finds out that you have willingly suppressed an information which is material in nature, then they are well withing their rights to reject the claim. So be truthful and disclose all the relevant (good and bad) information. It might increase your premium but will ensure that your claim is not rejected when you need the assistance the most.
 7. 24 Hr Hospitalization -  One needs to be hospitalised for a minimum of 24 hours before your claim is eligible for reimbursement/payment by the insurer. Only exception is Chemotherapy,radiation treatment done in Cancer where 24 hr hospitalisation isnt mandatory.
 8. Submit your Claim ASAP - Any claim submitted beyond the stipulated timeframe by the insurer might lead to its rejection . It is advisable to submit claims within 7 days of getting discharged from the hospital.   

Saturday, October 1, 2011


After stupendous success of mobile number portability introduced by TRAI , IRDA too has taken a cue and introduced health insurance portability in India from 1st October 2011. This is a huge step in the right direction considering there was lot of discontentment among the consumers about the manner in which they were being treated by their health insurers. Some of the common grouses were:

1. The health insurance companies mandated on a waiting period for covering pre existing diseases to each and every customer once he comes in their fold, irrespective of whether or not the person had any other policy where he had served out the waiting period. So in effect , every time you changed the company , you would have had to start the waiting period all over again.
2. The insurers generally were resorting to increasing the renewal premium by a steep margin for those policyholders who have had a claim in the year. This was mostly done to discourage the policyholders from renewing the policy with them. Thus they wanted to get rid of policyholders who they thought could be "claim prone".
3.In lot of cases, policyholder's request for renewal after a claim was rejected without any material reason from the insurer. This meant a great nuisance for the policyholder since he had to start his waiting period for preexisting disease all over again with the new insurer.

To address some of these issues , IRDA has mandated health insurance portability now. What exactly does it mean?
Health Insurance Portability means that a health insurance policyholder can now choose to change his insurance provider without foregoing any of the benefits covered in his/her current policy. For instance, if you have a health insurance/mediclaim plan from ICICI Lombard and if for any reason you are not happy with the company , then you can change over to any other insurance provider without foregoing any benefit that you may be enjoying under your current plan. 
What are the benefits of Health Insurance Portability? Following are the few of the benefits:
1. CHOICE - Now as a policyholder , you will have a choice which till now you didn't have. You can now switch over to any health insurance provider . 
2. COVERAGE OF PREEXISTING DISEASES - Once you move from one general insurance company to another for their health insurance or mediclaim plan, you will continue to get the same benefit that you got in your old plan.For example , if you were covered for Diabetes in Plan A and then you  migrated to Plan B , then in the Plan B too , you will have that covered. 
3. NO FRESH WAITING PERIOD - Once you change over to new insurance provider, you need not start your waiting period for getting preexisting diseases covered all over again. You will have the benefit of counting the number of years you waited in your earlier plan .For example, if the waiting period for covering Diabetes under the Plan A is 4 years and after 2 years you migrated to Plan B from another company where also the waiting period for covering Diabetes is 4 years, then you will have to serve waiting period of only 2 years with Plan B since you have already served 2 years under Plan A. This is a big change for all the policyholders.
4. NO CLAIM BONUS TOO TO BE PAID - If you had claim free year in your first policy , then on switching over to new policy , you will be entitled to no claim bonus too from the new insurance provider .

How to Change the Policy or Insurance Provider in India?

You will have to do following :-
1. Apply with the insurance company you wish to change to , at least 45 days prior to your current policy getting over.
2. Inform the IRDA too about the insurance firm you wish to change to.

What else should you consider before switching over?
Consider the following before you finally sign on the switch application 
a. Check for the new premium rates being charged by the other insurance companies for similar coverage in terms of Sum assured and diseases covered.
b. Check for the network of hospitals that they have under cashless scheme.The more the merrier.
c.Also check claim settlement ratio of the firms. The company which doesn't have good record in settling the claims does not merit a chance. 
You should go with the firm which has good claim settlement ration, great hospital network and reasonable premium.
So its time to pull out your mediclaim policy documents and check if it needs to be from another company .

Stay wise and happy investing!!

Tuesday, September 27, 2011


Tax saving FDs offered by banks in India are good option for someone looking to save tax under Sec 80 C without taking any risk that is inherent in equity exposure that ELSS offers. So, if you are one of those conservative investors who want to save tax via FDs , then it would be pertinent to know which banks are offering you the best deal currently. 

Following are the 5 best Tax saving FDs that are being currently on offer ( as on Sept 11).

 Rank   Bank                                Rate On Int.(p.a.)  Rs 10000 will grow 
 1.   Tamilnad Mercantile Bank    10%                             Rs16386.
 2.    City Union Bank                   9.75%                           Rs 16186
 3.    IDBI Bank                            9.50%                           Rs 15991
 4.    Punjab And Sind Bank         9.50%                           Rs 15991
 5.    State Bank of Travancore   9.50%                           Rs 15991

Happy investing!!   

Monday, September 26, 2011


There have been times , when we have been faced with situation of transferring money from bank account to another account without visiting bank branch. One can do cash transactions via netbanking if one doesnt want to visit the branch or the branch timings are over. But what if we in a place where internet isnt available and we need to transfer cash immediately . Relax, we have a solution now. Resereve Bank Of India has now allowed cash transaction upto Rs 50000 from mobile phones . To do so , we need to follow the following steps:-

1. Register with the bank for interbank Mobile Payment Service (IMPS).
2. Download the application on the mobile phone.
3. Log in to the application
4. Select bank account from which funds are to be transferred.
5. Select mobile money transfer service.
6. Enter 10 digit mobile number, 7 digit MMID and desired amount to be transferred.
7. Confirm all the details.
8. Done. You will recieve sms confirming the same.


1. Another platform to do non branch based cash transaction besides netbanking .
2. Ease of operation is huge since we are all with our mobuile phones virtually at all times.
3. Increased penetration of banking services in underbanked areas where bank branches arent available.


1. Cash transactions of upto Rs 50000 only can be done via this platform as of now.
2. Traning could be an issue for rural folk who are very tech savvy.

Saturday, September 24, 2011


"The desire for gold is the most universal and deeply rooted commercial instinct of the human race."
Gerald M. Loeb
The above mentioned adage perfectly sums up the love investors have showered on the precious metal since times immemorial. This metal has retained its numero uno pisition as the "Metal of choice" over centuries. So what really makes this metal so desirable inspite of its very limited medicinal or industrial usage? Following are just the few of many reasons responsible for the same :
1. Its widespread use in Jewellery - It has always been used a metal of choice when it comes to Jewellery. In India, for instance, most of the gold demand is on account on Jewellery .This demand for gold jewellery has made India one of the leading countries as far as gold consumption is concerned.
2. It was used as Currency - Gold emerged as a major currency very early during human civilization where kings across continents used gold coins as currency in their respective kingdoms. It was also used as base for new "paper currency" which sovereign governments printed , till very recently. It is still considered as hedge against dollar , the world's reserve currency.
3.Excellent hedge against inflation - Investors flock to gold because it has been proven beyond doubt that it is the best asset class which provides hedge against inflation . Gold investment protects the purchasing power of your investment/portfolio.
Now, if you are wondering how does one invest in gold , then you may want to explore following 3 options:
1. Investment in Gold Mining Funds - You can invest in funds that invest in gold mining funds such as AIG World Gold and DSPBR World Gold Fund. This option will help you own the world's gold reserves and hence as and when gold as an asset class does well, these mining firms will do well and consequently , you as an investor will do well.
2. Gold ETFs - Next, you can invest in paper gold through gold exchange traded fund (ETF), wherein you buy the gold units from the stock exchange for which you need a demat account to buy and sell the units on the stock exchange.
3. Gold Fund of Funds - And more recently, you have the option of investing in a gold fund of fund, such as Reliance Gold Savings, Kotak Gold and SBI Gold fund, which are all passively managed fund of fund that invests in the open-ended Gold Exchange Traded Fund of their fund houses, which in turn invests in physical gold with 99.5 per cent purity. This structure is convenient for those who do not have a Demat account and want to start a systematic investment plan in gold.

Depending on your convenience and investment needs; you can consider any of the options to invest in gold. Amongst the investing option; ETFs and gold funds should be better for the liquidity they offer and the fact that these invest into physical gold, their value will be closest to that of gold.


We all use our cheque leaves while making payments to various parties/paying bills etc , but, have we ever wondered what all can go wrong with these cheque leaves? There have been numerous cases of fraud , where the modus operandi has been misuse of the cheque leaf. Hence it is imperative to know ,first, what all can go wrong and then what safeguards to take with your cheque leaves.

What Can Go Wrong?

1. Cheque can be misused - Lot of fraudsters tamper with the cheque which one writes by adding a name of account number , making alteration, adding digits etc and then countersigning on it. This way they loot the unsuspecting guy , his hard earned money.

2. Cheque can be assigned - Since cheques are negotiable instruments , it can be assigned from one person to another and as such , one can simply cut the beneficiary name and assign the cheque in ones own name and then bank it with his own banker. This was he wont have to forge the drawers signature. He simply will have to sign for the beneficiary and since the beneficiary's account may not be with the presenting bank /accepting bank , it is difficult to spot the fraud. But thankfully only few cooperative banks do accept cheques which are "assigned to third party".

What safeguards to take?
1. Always keep chequebook in safe custody - This is the most basic precaution that one must take. Safe custody of the cheque book will ensure that it does not reach in rogue element's hands easily and thus the chances of its misuse is that much lesser.

2. Always give "Account Payee" cheque - Wherever possible avoid giving "Self" or "Bearer" cheques since that opens up lot of possibility of fraud. Anyone with that cheque can go to any branch and get that encashed since it is an open cheque drawn in favour of the presenting party without mentioning its name. So avoid it.

3. Always write the name of beneficiary - Always mention the name of the beneficiary to whom the cheque is being issued. This will enable the bank to cheque Identity details of the presenter in case of any doubt etc. Also as a prudent banking practise, banks do check ID proof before giving large value cash withdrawals to unknown person. So a name on the cheque rather than just"Self" or " bearer" would help.

4. Never leave Blank spaces in the cheque leaf - Always try to use the full space of the cheque without leaving any space which may be used later for adding name or account number etc. You may cancel the empty space by striking it with a line .

5. Dont hand over PDCs to sales executives - In lot of fraud cases, Sales executives from Bank DSAs collect PDCs from the customer even before the loan is disbursed/or is about to be disbursed. These cheques then are used by the executives to siphon off the funds from the customers account. Hence, avoid giving PDCs to executive, you must give it to the branch or loan disbursal centre with proper acknowledgement. Also never give cheque without any beneficiary details (lot of people do it) since execs tell them that they will fill that portion later. The same portion may be used by execs to write their own name and thus they are able to withdraw amount from unsuspecting customers.

If you follow these basic guidelines, then I am sure you will be able to stay out of these fraudsters who are out to make quick buck at your expense.

Tuesday, March 1, 2011

Budget 2011-12 - What is in it for tax payers??

Well like every year , this year too 28th Feb 11 was one of the most awaited days of the year. Everybody was waiting to see what our beloved FM dishes out to common taxpayers via his budget for FY11-12.

The budget overall hasn't done much to enthuse common man. There are no major tax breaks for majority of the junta . But, he has done few things which we need to take note of :-

1. Increased tax exemption limit for male to Rs 1.8 Lakhs : The tax exemption limit has been increased by Rs 20000 from 1.6 Lacs last year to 1.8 Lacs this year. This is only for males as the tax exemption limit for female taxpayers is already at 1.9 lacs. The additional relief will save 2000 rupees for everyone who falls in ta bracket. Small relief, but, relief nonetheless.

2. No need to file ITR for salaried people: Pranab Da has also mandated that those salaried people whose annual income is less than Rs 5 lacs/annum need not file ITR separately. The same will be done by their company. They can decalrae their additional income like FD interest income etc to the employer who will accordingly deduct TDS and file return.

3. No Tax till Rs 5 lac income for Very Senior Citizen: In an unprecedented move, Finance Minister has introduced an absolutely new segment in the income tax viz that of Very Senior Citizen. All those taxpayers who are above 80 years of age will be classified as very senior citizen and they wont have to pay any tax till the annual income of RS 5 lacs. This is a huge step taken for welfare of very senior citizens since in India, we dont have any social security and older people have to spend considerably on medical care and as such this was required. Here is thumbs up to Mr FM for doing this.

4. Tax Relief under Infrastructure Bond Investment Extended : The Tax relief offered on investing upto Rs 20000 in infrastructure bonds like IDBI, L&T etc which was introduced in FY10-11 has been enxtended for FY11-12 too. So taxpayers can continue to invest in this and save taxes upto Rs6180 under this option.

Besides, these there is nothing much to cheer about for normal taxpayer in this years budget. However, with DTC proposed to be launched in FY12-13, things will be much better and simpler for all taxpayers.

I only hope that Mr FM is able to deliver on his promise of making DTC operational from 1st April 2012. More Power to you Mr. FM.!!

Saturday, January 8, 2011


January to March is that time of the year when most of us are rushing towards making our mandatory"tax saving investments". While we are all well versed with tax saving options available to us under section 80CC, but, this financial year government has offered us another option where we can invest in infrastructure bonds and save taxes. Here, an investor can invest upto maximum of Rs 20000 which can be claimed as deduction from his taxable income. This is over and above RS 1 lac that you can save under Sec 80 C. SO question to ask is should you and I invest in it?

Lets first examine the pros of this option
1. Additional tax saving of Rs 6600 if you are under 30% tax bracket.

Other than the above mentioned benefit , there isn't any other major benefit associated with investing in these bonds.

Now , lets look at cons too
1. High lock in period - Most of these bonds are of 10 year tenure where minimum lockin is of 5 years and then these bonds will be listed on exchanges where you can sell it provided you find a buyer.
2. Modest post tax returns - The returns offered by these bonds are between 7-8% which is modest at best considering the high lockin.

Should you invest?
The short answer to this is no if you are a savvy investor since the lockin is high and the returns are nothing to rave about.

So what should you do ?
One can always invest this money in equity or well diversified mututal fund which will surely give better returns in 5-10 years , besides offering liquidity which these bonds don't offer. Always remember that any "tax saving investment" first MUST qualify as GOOD INVESTMENT and then if it helps save you tax then it is even better , but never, invest in any policy/plan or bond just because it helps you save tax.

Happy investing!!