{"id":14226,"date":"2026-05-27T07:39:38","date_gmt":"2026-05-27T07:39:38","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/glossary\/nhai-bonds\/"},"modified":"2026-05-27T07:39:38","modified_gmt":"2026-05-27T07:39:38","slug":"nhai-bonds","status":"publish","type":"glossary","link":"https:\/\/lemonn.co.in\/blog\/glossary\/nhai-bonds\/","title":{"rendered":"NHAI Bonds"},"content":{"rendered":"

NHAI (National Highways Authority of India) Bonds<\/a> are debt instruments issued by the NHAI to raise funds for building and maintaining India’s national highway network. These bonds offer investors a safe, government-backed investment option with a fixed interest rate and tax<\/a> benefits for certain categories.<\/p>\n

What Are NHAI Bonds<\/a>?<\/h2>\n

NHAI is a statutory authority under the Ministry of Road Transport and Highways. It issues bonds in the market to finance highway construction projects under its portfolio<\/a>. The bonds are backed by the NHAI’s cash flow<\/a>s (primarily toll collections and government grants), giving them high credit quality.<\/p>\n

NHAI has issued various types of bonds over the years, including:<\/p>\n

– **Regular capital bonds**: for institutional investor<\/a>s with competitive interest rates
\n– **Tax-free bonds<\/a>**: offered in 2013-14 and 2015-16 with interest exempt from income tax<\/a> (these have been fully subscribed and are no longer available for fresh purchase)
\n– **7.35% NHAI bonds**: listed on NSE<\/a>\/BSE<\/a> and tradeable in the secondary market<\/a><\/p>\n

Key Features of NHAI Bonds<\/h2>\n

– **Credit rating**: AAA (highest safety rating) by CRISIL and ICRA
\n– **Issuer**: government statutory body; extremely low default risk
\n– **Interest**: fixed coupon paid semi-annually or annually
\n– **Tenure**: typically 10 to 20 years for long-term bonds
\n– **Tax-free bonds** (historical): interest was exempt from income tax under Section 10(15)(iv)<\/p>\n

NHAI Bonds in the Secondary Market<\/h2>\n

Tax-free NHAI bonds issued in 2013-16 trade in the secondary market on BSE and NSE. Their prices depend on prevailing interest rates. When rates fall, old high-coupon bonds trade at a premium<\/a>; when rates rise, they trade at a discount. Retail investors can buy these bonds through a demat-linked stock trading account<\/a>.<\/p>\n

Who Should Invest in NHAI Bonds?<\/h2>\n

– High tax bracket investors seeking tax-efficient fixed income
\n– Conservative investors who want government-backed safety with better yield<\/a> than FDs
\n– Long-term investors comfortable with 10 to 20-year tenures<\/p>\n

Practical Example<\/h2>\n

Sunita, in the 30% tax bracket, buys secondary-market NHAI tax-free bonds with a coupon of 8.1% in 2015. On a Rs 5 lakh investment, she earns Rs 40,500 per year in tax-free interest. At her 30% tax rate, the pre-tax equivalent yield is approximately 11.57%, significantly better than a bank FD. She holds the bonds to maturity, knowing they are backed by a government statutory authority.<\/p>\n

Key Takeaways<\/h2>\n

– NHAI bonds are AAA-rated bonds issued by India’s national highway authority
\n– Tax-free NHAI bonds (issued 2013-16) are available in the secondary market and offer tax-exempt interest
\n– Interest income on regular NHAI bonds is taxable; only the specifically designated tax-free series is exempt
\n– Very safe investment due to government backing; ideal for conservative, long-term investors
\n– Prices in the secondary market reflect current interest rate levels; buy below par when rates are high<\/p>\n","protected":false},"excerpt":{"rendered":"

NHAI (National Highways Authority of India) Bonds are debt instruments issued by the NHAI to raise funds for building and maintaining India’s national highway network. These bonds offer investors a safe, government-backed investment option with a fixed interest rate and tax benefits for certain categories. What Are NHAI Bonds? NHAI is a statutory authority under […]<\/p>\n","protected":false},"author":3,"featured_media":0,"menu_order":0,"template":"","meta":{"_uag_custom_page_level_css":"","footnotes":""},"class_list":["post-14226","glossary","type-glossary","status-publish","hentry"],"blocksy_meta":[],"uagb_featured_image_src":{"full":false,"thumbnail":false,"medium":false,"medium_large":false,"large":false,"1536x1536":false,"2048x2048":false,"web-stories-poster-portrait":false,"web-stories-publisher-logo":false,"web-stories-thumbnail":false},"uagb_author_info":{"display_name":"Team Lemonn","author_link":"https:\/\/lemonn.co.in\/blog\/author\/ashu\/"},"uagb_comment_info":0,"uagb_excerpt":"NHAI (National Highways Authority of India) Bonds are debt instruments issued by the NHAI to raise funds for building and maintaining India’s national highway network. These bonds offer investors a safe, government-backed investment option with a fixed interest rate and tax benefits for certain categories. What Are NHAI Bonds? NHAI is a statutory authority under…","_links":{"self":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/14226","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/types\/glossary"}],"author":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/users\/3"}],"version-history":[{"count":0,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/14226\/revisions"}],"wp:attachment":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media?parent=14226"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}