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IRFC Tax Free Bonds:


The financing arm of Indian railways “Indian Railway Finance Corporation Ltd” has come up with a issue of Tax free bonds with following details.It is infrastructure finance company and 100% shareholding held by Govt Of India.

IRFC Issue Details:

  • Issue Open date: 27th Jan 2012.
  • Issue Close Date:10th Feb 2012.
  • Secured NCDs having tax benefits u/s 10(15)(iv)(h).
  • Issue size: Rs.3000 Cr. with option to retain oversubscription upto shelf limit i.e. upto 6300 crores.
  • Credit rating:”AAA” from ICRA, CARE and CRISIL,indicates stable and highest safety.

Interest Rates:

Options 1 2
Tenure 10 Yrs 15 Yrs
Face value Rs.1000/- Rs.1000/-
Min.Application 10Bonds OR[Rs.10,000] 10 Bonds   ORRs.10,000/-
In multiples of 5 Bonds[Rs.5000] 5 Bonds[Rs.5000]
                              Interest Rates
Retail [Cateogary-III] 8.15% 8.30%
Others[I and II] 8.00% 8.10%
Interest Payment Annually Annually
  •  Interest payment date will be 15th Oct each year.
  • Interest received from these bonds will be free from income tax and of course no TDS for whats ever amount.
  • Wealth tax is not levied on investments in these bonds.
  • Just,do not confuse it with 80-ccf issues and 80-ccf benefit is not available with these bonds.

Who Can Apply:

  1. Cateogary I: QIB and Corporates.
  2. Cateogary II: Resident individuals,HUFs through Karta,NRIs above Rs. 5 lakh.
  3. Cateogary III:Resident individuals,HUFs through Karta,NRIs below Rs. 5 lakh.

Invest Or Not?

Such kind of issues apart from tax free interests,offer great diversification within debt portfolio,so one can  definitely think to invest some part of the money in such issues.Partial liquidity is available through annual interest payment and can be reinvested in proper instrument to improve overall yield.

 


Category: Fixed Income

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