RBI Bonds are one of the investment options that is considered by many investors to park their money. Interest that is paid or credited every six months constitutes the returns on the RBI 7.75% savings bonds. Both cumulative and non-cumulative bond issues are made. For the periods ending on July 31 and January 31, respectively, the interest on non-cumulative bonds is paid to investors every six months starting on the date of issuance. When it comes to cumulative bonds, the interest is compounded every six months, credited to the investor's account, and paid to the investor when the bond matures. By purchasing these bonds, a person can reduce his annual taxable income by Rs 20,000, which will result in a tax reduction. The Rs. 1.5 lakh deduction allowed by Section 80C of the Act is not included in this deduction.