1. Tax-free bonds are typically issued by government enterprises. They earn a fixed interest rate, which is tax-free in the hands of the investor.
2. The face value of bonds is Rs 1,000 and the minimum ticket size is specified, which is normally Rs 5,000-10,000.
3. One can invest in multiples of Rs 1,000. One can also invest through the online facility offered by brokers or banks. Bonds can be held in the physical or demat form.
4. These bonds are usually issued on a first come, first served basis from the date of issue opening. Based on the allotment of actual bonds, the remaining application amount is refunded.
5. After the allotment, these bonds are listed on the stock exchanges and can be traded there. However, such bonds have limited liquidity.