Tax-free bonds — interest fully exempt (Income-tax Act 2025; old 10(15))

What's exempt

• Interest on notified tax-free bonds — no tax at any slab, and no TDS.
• Interest on certain other specified instruments (e.g. some savings and relief bonds) also falls under the same exemption umbrella.

Why it's powerful

For someone in the 30% slab, a 5.5% tax-free coupon is equivalent to roughly 7.9% pre-tax — often better than a taxable FD. These bonds are also listed, so you can buy them in the secondary market even though fresh issues have stopped.

Watch out

Only the interest is exempt — any capital gain on selling the bond before maturity is taxable in the normal way.

Who it helps

Retirees and high-slab investors who want stable, fully tax-free income.