Who can invest in FRSB and what is the minimum investment?

Any resident Indian citizen (individual, not HUF) can invest in FRSB 2020. The minimum investment is Rs 1,000 in multiples of Rs 1,000. There is no maximum limit. NRIs are not eligible. The bond is issued in Bond Ledger Account (BLA) form only — no physical certificates are issued. Investments can be made through designated banks (SBI, nationalised banks, select private banks) and Stock Holding Corporation of India.

Can I withdraw FRSB before 7 years?

Premature redemption is NOT allowed for investors below 60 years of age. Senior citizens can exit early based on age at the time of investment: age 60-70 can exit after 6 years, age 70-80 can exit after 5 years, and age 80+ can exit after 4 years. A penalty of 50% of the last coupon (half-year interest) is deducted on premature withdrawal. The bond is not tradeable, not transferable (except to nominee/legal heir on death), and cannot be used as collateral for loans.

RBI Floating Rate Savings Bond (FRSB) Calculator — FY 2025-26

Q: What is the current RBI Floating Rate Savings Bond interest rate?

The FRSB 2020 (Taxable) interest rate for January-June 2026 is 8.05% per annum. This rate is calculated as NSC rate (7.70%) plus a fixed spread of 0.35%. The rate resets every 6 months on 1 January and 1 July, linked to the prevailing NSC rate.

Q: Is FRSB interest taxable? What about TDS?

Yes, FRSB interest is fully taxable as Income from Other Sources at your applicable income tax slab rate. There is no Section 80C deduction on the investment. TDS at 10% is deducted under Section 193 if annual interest exceeds Rs 10,000. Without PAN, TDS is 20%. The bond replaced the earlier 7.75% GOI Savings Bond which was also taxable.

Q: How does FRSB compare with PPF, SCSS, and NSC?

FRSB offers 8.05% (floating) with no investment cap but no tax benefits. PPF offers 7.1% with EEE tax status (tax-free) but has a Rs 1.5 lakh/year cap and 15-year lock-in. SCSS offers the highest rate at 8.2% with 80C benefit but is restricted to citizens aged 60+ with a Rs 30 lakh cap. NSC offers 7.7% with 80C benefit and 5-year lock-in. For investors in the 30% tax slab, PPF often gives the best post-tax returns due to its EEE status, while FRSB is better for those wanting to invest large lump sums beyond PPF and SCSS limits.

Calculate your semi-annual interest income from FRSB 2020 (Taxable) at the current rate of 8.05% (NSC 7.70% + 0.35%). See tax impact on your FRSB interest, TDS under Section 193, and compare FRSB vs PPF vs SCSS vs NSC for the best post-tax returns. Updated for January-June 2026 rate.

Calculate semi-annual interest income from RBI Floating Rate Savings Bond 2020

Investment amount

₹

Lump sum (min \u20B91,000, no upper limit). Multiples of \u20B91,000.

FRSB interest rate

Current rate: 8.05% (NSC 7.7% + 0.35%). Resets every 6 months.

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How to Use This Calculator

FRSB Returns tab

Enter your investment amount (minimum ₹1,000, no upper limit) and the current FRSB interest rate (8.05% for Jan–Jun 2026). The calculator shows your semi-annual interest payout (paid on 1 January and 1 July), annual income, total interest over 7 years, and maturity value. It also displays the rate reset schedule, premature exit rules for senior citizens, and TDS applicability.

Tax Impact tab

Enter your annual FRSB interest, other income (salary, pension, FD interest, rent), and select your tax regime. The calculator computes the marginal tax on your FRSB interest, post-tax effective return, and TDS reconciliation. Key insight: FRSB has NO Section 80C deduction — the full interest is taxable under both old and new regimes.

FRSB vs PPF vs SCSS vs NSC tab

Enter an investment amount and your tax slab to compare post-tax returns across four government-backed instruments. The comparison factors in investment caps (PPF ₹1.5L/yr, SCSS ₹30L), tax treatment (PPF is tax-free, SCSS and NSC offer 80C), and different tenures. This helps you decide where to park your savings for the best after-tax returns.

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The Formula

FRSB interest is calculated on a simple interest basis and paid semi-annually. The interest is NOT reinvested or compounded:

Semi-Annual Interest Payout:
Semi-Annual Interest = (Investment × Annual Rate) / 2

Where:
Investment = Lump sum amount (min ₹1,000, no upper cap)
Annual Rate = NSC rate + 0.35% = 7.70% + 0.35% = 8.05% (Jan–Jun 2026)

Annual Interest:
Annual Interest = Investment × Annual Rate / 100

Total Interest (7 years, assuming constant rate):
Total Interest = Annual Interest × 7

Maturity Value:
Maturity Value = Investment + Total Interest

Rate Reset Formula:
FRSB Rate = Prevailing NSC Rate + 0.35%
Resets on: 1 January and 1 July each year

TDS (Section 193):
TDS at 10% if annual interest > ₹10,000
TDS at 20% if PAN not provided

Unlike NSC (which compounds) or PPF (which compounds and is tax-free), FRSB pays out interest semi-annually without reinvestment. The floating rate means your actual returns over 7 years will differ from projections if NSC rates change. Historically, NSC rates have been relatively stable (7.0%–8.0% range since 2016), so FRSB rates have varied between 7.35% and 8.35%.

Example

Priya — IT professional, ₹10,00,000 in FRSB for safety

Priya is 35, works in Bengaluru, and wants to park ₹10 lakh in a sovereign-backed instrument. She cannot use SCSS (under 60) and has already maxed out her PPF at ₹1.5 lakh/year. She chooses FRSB for the remaining amount. Her salary is ₹12,00,000/year and she is in the 30% tax slab (new regime).

Step 1: Calculate semi-annual interest

FRSB investment₹10,00,000

Interest rate8.05% p.a.

Semi-annual interest₹10,00,000 × 8.05% / 2 = ₹40,250

Annual interest₹80,500

Monthly equivalent~₹6,708

Step 2: Calculate tax impact

Annual FRSB interest₹80,500

Section 80C benefitNot available for FRSB

Tax at 30% slab (marginal)₹24,150

Post-tax annual interest₹56,350

Post-tax effective return5.64% p.a.

Step 3: Seven-year summary (constant rate assumed)

Total interest (7 years)₹5,63,500

Total tax on interest (7 years)₹1,69,050

Post-tax total interest₹3,94,450

Maturity value (pre-tax)₹15,63,500

TDS deducted per year₹8,050 (10% of ₹80,500)

Priya receives ₹40,250 every 6 months (~₹6,708/month equivalent). At the 30% slab, her post-tax effective return is 5.64%. While lower than PPF's 7.1% tax-free return, FRSB allows her to invest the full ₹10 lakh as a lump sum without the ₹1.5 lakh/year PPF cap. Over 7 years, she earns ₹5.64 lakh in gross interest, with ₹3.94 lakh remaining after tax.

FAQ

What is the current RBI Floating Rate Savings Bond interest rate? ▼

The FRSB 2020 (Taxable) interest rate for January–June 2026 is 8.05% per annum. This rate equals the prevailing NSC rate (7.70%) plus a fixed spread of 0.35 percentage points. The rate resets every 6 months on 1 January and 1 July. This bond replaced the erstwhile 7.75% GOI Savings (Taxable) Bonds, 2018 which were discontinued on 28 May 2020. The FRSB rate has been 8.05% since January 2024, as the NSC rate has remained at 7.70% since April 2023.

Who can invest and what are the eligibility criteria? ▼

Eligible: Any resident Indian citizen (individual), either singly or jointly. Not eligible: NRIs, HUFs, trusts, or institutions. The minimum investment is ₹1,000 in multiples of ₹1,000, with no maximum limit. Bonds are issued in Bond Ledger Account (BLA) form only — no physical certificates. You can invest through designated banks (SBI, all nationalised banks, select private banks like HDFC Bank, ICICI Bank, Axis Bank) and Stock Holding Corporation of India (SHCIL). A joint holder is treated as nominee — the bond proceeds pass to the surviving holder on death of the first holder.

Is FRSB interest taxable? What about TDS? ▼

Yes, FRSB interest is fully taxable as “Income from Other Sources” at your applicable slab rate. No Section 80C deduction is available on the investment amount — this is a key disadvantage compared to PPF, SCSS, and NSC. TDS: From 1 October 2024, TDS at 10% is deducted under Section 193 if annual interest exceeds ₹10,000. Without PAN, TDS is 20%. You can claim a refund of excess TDS when filing your ITR if your actual tax liability is lower. There is no provision for Form 15G/15H to avoid TDS on FRSB (unlike bank FDs).

Can I exit FRSB before 7 years? What is the penalty? ▼

Under 60 years: Premature redemption is NOT allowed. You must hold the bond for the full 7-year tenure. Senior citizens can exit early based on age at the time of investment: 60–70 years: exit after 6 years. 70–80 years: exit after 5 years. 80+ years: exit after 4 years. A penalty of 50% of the last coupon (half-year interest amount) is deducted on premature withdrawal. On death of the bondholder, the bond is repaid to the nominee/legal heir with interest accrued up to the date of death, without any penalty. The bond is not tradeable on any exchange, not transferable to another person (except nominee on death), and cannot be used as collateral for any loan.

How does FRSB compare with PPF, SCSS, and NSC? ▼

FRSB (8.05%): No investment cap, no 80C, fully taxable, 7-year lock-in, floating rate. Best for large lump sums beyond PPF/SCSS limits. PPF (7.1%): ₹1.5L/year cap, EEE tax status (completely tax-free), 15-year lock-in. Best post-tax returns at higher slabs. SCSS (8.2%): Highest rate, quarterly payouts, ₹30L cap, 80C + 80TTB benefits, but restricted to 60+ citizens. Best for retirees. NSC (7.7%): 80C benefit, 5-year lock-in, interest compounded annually but paid at maturity. Years 1–4 accrued interest qualifies for 80C reinvestment deduction. For a 30% slab investor, PPF gives ~7.1% post-tax (tax-free), while FRSB gives ~5.6% post-tax. But PPF caps at ₹1.5L/year — if you have ₹50L to invest, FRSB is one of the few sovereign options with no cap.

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