Key terms

Liquidity — the one number that matters

The bond cannot be sold, traded, or pledged. Early exit exists for senior citizens only, on an age ladder: age 60–70 may exit after 6 years held, 70–80 after 5 years, and 80+ after 4 years — each surrendering 50% of the last coupon due as a penalty. Everyone else's capital is locked for the full 7 years; the only other way out is transfer to a nominee on death.

Taxation

Interest is paid out (not accumulated) every 1 January and 1 July, and is fully taxable as income from other sources in the year received — there is no capital-gains leg and no indexation question, because the bond is never sold. TDS applies once annual interest crosses ₹10,000.

The 7-year average will differ from 5.41% — the rate resets twice a year with the NSC rate, so this is a snapshot, not a forecast.

Instrument, as filed with the depository

Security stacks three deep: an unconditional and irrevocable state guarantee, a debt-service reserve plus bond-servicing escrow holding roughly two quarters of debt service, and an exclusive mortgage over a ~400-acre land parcel in Kancha Gachibowli valued to give ~1.5× asset cover. The rating's (CE) suffix — credit enhancement — flags that AA rests on the guarantee, not on TSIICL's own standalone balance sheet.

Price, and why it's not 100

The bond trades above par — roughly ₹105–106 per ₹100 of face value, cheaper (lower premium, higher yield) for a larger ticket and dearer for a smaller one. A same-day market check on a listed platform showed ₹105.30 clean / 7.98% YTM; the desk quote on this deal ranged 7.9–8.3% depending on lot size. All of these are legitimate — corporate-bond pricing moves through the day and by counterparty, and more so with an MPC review a month out.

Liquidity

Listed on the NSE/BSE debt segment, so a sale is possible in principle — but the corporate-bond secondary market is thin, particularly for large lots, and the realistic plan for a holding this size is to run it to the December 2030 maturity, roughly 4 years 4 months from now.

Taxation

Quarterly coupons are taxed at slab every year, on accrual — there's no deferral here despite the bond not being sold. Because the entry price sits above the ₹100 redemption value, maturity itself books a capital loss (the premium paid, unwound) that can offset other capital gains. If sold before maturity after a 12-month hold, gain or loss is long-term at a flat 12.5% (no indexation) — this is a plain secured NCD, not a market-linked debenture, so it keeps the older capital-gains treatment that debt mutual funds lost in 2023.

Approximate post-tax carry on the coupon leg: 9.35% × (1−32.76%) ≈ 6.29%, before the maturity-time capital loss is even used as a shield. Treat this as a sketch, not an IRR — ask your CA to model the actual cash flows against your other capital gains.

Safety

These are unsecured deposits with the company itself, not a bank. DICGC insurance (up to ₹5L) covers only bank deposits — an NBFC or HFC deposit's safety is entirely a function of that issuer's own current CRISIL/ICRA/CARE rating and balance sheet, reviewed at the time of booking, not assumed from the brand name.

Liquidity

Premature withdrawal is typically allowed after a short lock-in (often 3 months), but at a penal rate — commonly 1–3 percentage points below the contracted rate. The deposit itself cannot be sold or transferred to a third party.

Taxation

Interest is taxed at slab every year on accrual — including on cumulative (reinvestment) deposits, where the investor receives no cash at all until maturity but still owes tax annually on the interest deemed to accrue. TDS applies above just ₹5,000 of interest per financial year under Section 194A for company deposits, versus ₹40,000 for bank FDs.

Safety

Underlying paper is overwhelmingly AAA/A1+ rated and average maturity is short (about 1–1.7 years across the four above), which keeps interest-rate risk low. None of this is a guarantee, though — NAV is market-linked and can still dip on a credit event or a sharp rate move. This is the one instrument in the note with no sovereign or state backstop of any kind.

Liquidity

Open-ended, redeemable on any business day, proceeds in T+1, and most of these carry no exit load. Nothing else in this note comes close on liquidity.

Taxation — the structural difference

Since April 2023, these are "specified mutual funds" under Section 50AA: gains are taxed at slab rate regardless of holding period, with no LTCG rate and no indexation. What's different from every other row in this note is when tax falls due — on redemption, not year by year — and on how much. Each unit redeemed is part return of the investor's own principal and part gain, in the same proportion the fund's NAV has actually appreciated; only the gain slice is added to slab income. Resident individuals also face no TDS on redemption itself (Section 194K only bites on dividend/IDCW payouts).

A scenario, not a formula — the taxable slice of each withdrawal grows as the fund's own accrued gains build up over the holding period, so ₹14,899 is this year's figure, not a constant.

*Because tax applies only to the gain slice of each withdrawal, not the full amount, and only in the year money is actually drawn. If the investor's total taxable income for that year stays under ₹12L, the Section 87A rebate under the new regime can reduce tax on this income to nil — debt-fund gains are taxed at slab rate rather than a special rate, so they aren't on the short list of gains this rebate excludes. Confirm eligibility for your own return with your CA.