Power Finance Corporation plans to raise Rs 6000 crores through tax-free infrastructure bonds in the current financial year. The bonds have a face value of Rs 5,000 with 10 years maturity. There is a lock-in period of 5 years from the date of allotment. Earlier, IFCI raised about Rs 100 crore, including a greenshoe option of Rs 50 crore. Power Finance Corporation has filed a draft prospectus with the SEBI to float long term infrastructure bonds.
Issue Details :-
Issue Period : February 2011 to March 2011
Rating : “unrated” by CRISIL
Issue Size : Rs 6000 crore .
Face Value : Rs 5000 per Bond
Subscription Amount : Minimum 1 bonds
Lock-in Period : 5 years
Listing : NSE/BSE
Book Running Lead Managers for this issue are ICICI securities Ltd and SBI Capital Markets Ltd.
Registrar for this issue is Karvy Computershare
The funds raised through this issue will be utilised towards “infrastructure lending” as defined by the RBI in the regulations issued by it from time to time, after meeting the expenditures of, and related to the issue.
The maximum amount of income not chargeable to tax in case of individuals (other than women assesses and senior citizens) and HUFs is Rs 1,60,000. In the case of women, the limit is Rs 1,90, 000 and in the case of senior citizens, it is Rs 2,40,000 for FY10.Hence those guys whose income exceeds these slabs can go for these bonds.
Tax Benefits :- Under section 80CCF of the Income Tax Act, Rs 20,000 per annum paid or deposited as subscription to long term infrastructure bonds shall be deducted in computing the taxable income. This is over and above Rs 1,00,000 tax benefit available under section 80C, 80CCC and 80CCD.
Benefits as per Tax slabs :-
1. Slab 10.3% : Rs 2,060
2. Slab 20.6% : Rs 4,180
3. Slab 30.9% : Rs 6,180
Pros:- The limit of Rs 20,000 per annum is in addition to Sections 80C, 80CCC and 80CCD. Hence, it is advisable to consider applying in this issue.
Cons:- The bonds are locked in for five years, so there is no exit in case you need the money midway which restricts liquidity.
PFC officials have said they will float the bonds in 2 tranches. The first tranche of about Rs 2,000 crore in February 2011 and the balance in March 2011 through these longterm bonds.Google+