The other option in this bond has a three-year wait period and a maturity of nine years. The annuity payment is in seven installments of Rs 6000 each. In this bond, the interest payment per annuity (for an investment of Rs 20,000) is Rs 3000 for the first six installments and Rs 4000 in the seventh. The total interest payment is Rs 22,000. The third option is where the wait period is five years, like Option C. However, in this case, the holder of the bond is repaid half the face value of the bond at the end of the wait period. This means, an investor receives Rs 10,500 for a minimum investment of Rs 20,000 at the end of five years. Starting from the sixth year, he receives five equal annuities of Rs 8340. The total tenure of the bond is 10 years. In this case, the total interest payment will be Rs 31,700. Tax will be deducted at source at the rate of 10 per cent only on the interest portion perannuity.

While the Retirement Bond is a good investment bet for those planning their post-retirement life, the tax liability on the interest accrued could be a major deterrent. To that effect, the RBI Relief Bonds (albeit at a lower rate) have a distinct advantage as the interest income is totally tax-free. The other problem is that of liquidity. There is no put option for investors in the Retirement Bonds. So, once an investment is made, there is no way it can be recalled until the end of the maturity period. This is unlike the Relief Bonds where investors have easy liquidity.

Speaking of tax benefits, IDBI's Infrastructure Bond should appeal to those planning their tax-saving investments before the close of the financial year. The Section 88 benefit (20 per cent tax rebate) with a tenure of three years and an annual interest payment of 12.50 per cent gives an attractive yield of 22.34 per cent. A good option compared with either NSC or even PPF. The only hitch is that unlike PPF, interest income on theInfrastructure Bond is taxable. Those who have booked capital gains (especially in the buoyant software, pharma and FMCG stocks) can avail of capital gains tax exemption under Section 54 EA and EB by applying for those options in the Infrastructure Bonds.

For those who want to stick to regular fare of bonds, there is a Regular Income Bond (at 14 per cent annual interest payment) and a Growing Interest Bond (with an yield of 11 per cent for the first year). For the second time running, IDBI has not offered Deep Discount Bonds. This is not surprising as the investor appetite for such bonds has been waning ever since the CBDT clarification on the tax treatment.