The government on Thursday unveiled a taxable savings bond without any monetary ceiling that will have a maturity period of seven years. The bond will carry an annual interest rate of 7.75% payable half-yearly.

Individuals, including joint holdings, and Hindu Undivided Families can invest in the bond from January 10. Non Resident Indians, however are not allowed, the Ministry of Finance said.

The ministry said that the bonds will be issued for a minimum amount of Rs 1,000 and in multiples thereof, and will only be in a demat form (bond ledger account). Investors have the options of choosing between the cumulative and non-cumulative modes of interest payment. If they choose the cumulative option, interest is paid on the maturity of bonds, while the interest is paid on a half-yearly basis if an investor opts for the non-cumulative option.

Interest earned on the bond will be will be taxable under the Income Tax Act of 1961, but will be exempted from the wealth tax. The bonds are not transferable and cannot be traded in the secondary market or be used as collateral to receive loans from banks, non-banking financial companies or financial institutions.