Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: cpt :: articles on VAT and GST in India :: form 3cd :: TAX RATES - GOODS TAXABLE @ 4% :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARDS :: VAT Audit :: VAT RATES :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ACCOUNTING STANDARD :: list of goods taxed at 4% :: empanelment :: due date for vat payment :: TDS :: Central Excise rule to resale the machines to a new company
 
 
« General »
 Tax Department To Launch 2nd Phase Of Bank Accounts' Scrutiny Next Month
 How to claim tax benefit on tuition fees under Section 80C
 Online Income Tax grievance redressal facility launched at 60 offices
 Demonetisation impact on government tax revenue marginal; direct tax personal income grew at above budget estimates
 ICAI seeks more accountability, transparency in defence sector
 Will Budget help double farmers’ income?
 Verify online deposits made post demonetisation, income tax department asks taxpayers
 Union Budget 2017: Best budget is do not change anything, do no harm, implement well
 Why salaried class deserves standard deduction
 3 new taxes that Modi government could introduce, but won't
 Tax gains may showcase demonetisation windfall

Tax-free bonds: Not just a tax shelter
October, 05th 2013

Tax-free bonds launched by public sector companies are an ideal instrument for risk-averse retail investors. After Rural Electrification Corporation and Hudco, state-owned India Infrastructure Finance Company (IIFCL) has now launched a public issue of tax-free bonds to raise Rs 2,500 crore, with tenures of 10, 15 and 20 years. The issue will be open for subscription till October 31.

Under tax-free bonds, while the investor does not get any tax exemption under Section 80C of the Income Tax Act, 1961, the interest accrued is completely tax-free under Section 10(15)(iv)(h).

Only public sector companies can issue such tax bonds. Retail individual investors, qualified institutional buyers, corporates and high net-worth investors can invest in the tax-free bonds in varying proportions. Investors applying for an amount aggregating up to R10 lakh across all series of bonds in each tranche issue will come under the retail individual investor category. The same retail investor can also apply again in the next tranche or in the issue by other companies’ tax-free bonds.

Earlier this financial year, REC mobilised R3,500 crore through such bonds. Hudco, whose tax-free bond offering is currently open for subscription, is looking to garner R4,809 crore.

In its red herring prospectus, IIFCL had said that it plans to raise R8,171 crore through tax-free secured, redeemable, non-convertible bonds of the face value of R1,000 each for the current financial year. The company has now decided to restrict the issue size to R2,500 crore in the first tranche.

For retail investors, IIFCL, in the first tranche of the bond, is offering rates of 8.26% for 10-year paper, 8.63% for 15-year paper and 8.75% for 20-year paper. So, it makes sense for you to lock-in your money for a long period as this is not only the highest possible rate but also the interest accrued is completely tax-free.

For investors in the highest tax bracket, the effective yield is high. However, for qualified institutional investors, corporate and high networth investors, the rates are marginally lower — 8.01% for 10-year bond, 8.38% for 15-year bond and 8.50% for 20-year bond. Financial planners say long-duration bonds reduce

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Web Application Development Web based Software Solution Web Application Deployment Web Application Solutions Web Application Software Development Web Application Deployment Web Application Programming Web Application Design and Development

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions