Nov 052015
 

The Reserve Bank of India (RBI) in consultation with Government of India (GOI) has announced about the issue of “Sovereign Gold Bonds” .

The highlights and features of this Sovereign Gold bonds (2015-16) is as follows :-

Sl NoItem/FeatureDetails
1Date of Issue of BondsThese bonds will be issued on Nov 26 2015
2Application PeriodApplication will be accepted from 5th Nov 2015 to 20th Nov 2015
3Place of SalesThese bonds will be sold through banks and designated post offices, as may be notified
4Name of the BondSovereign Gold Bond
5IssuanceTo be issued by Reserve Bank India on behalf of the Government of India
6Who can apply?Resident Indian entities including Individuals, HUFs, Trusts, Universities, Charitable Institutions
7DenominationMultiples of Grams of Gold. Minimum 2 Grams and maximum 500 grams per person per financial year
8Tenor of the BondThe Tenor of the bond will be 8 years, but there will be an exit option at the end of 5 years.
9Issue PriceThe present issue is priced at 2684/- at present and the further issues to be priced at rates to be notified based on the prevailing market rate.
10Payment optionFund Transfer/Cash/Cheque/Demand Draft.
11Form of CertificateThe investors will be issued a Stock/Holding Certificate. These can be converted into demat form also.
12Redemption PriceThe redemption price will be in Indian Rupees based on previous week’s (Monday-Friday) simple average of closing price of gold of 999 purity published by IBJA.
13Rate of InterestThe investors will be compensated at a fixed rate of 2.75 per cent per annum payable semi-annually on the initial value of investment.
14CollateralBonds can be used as collateral for loans. The loan-to-value (LTV) ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank from time to time.
15KYC RequirementsKnow-your-customer (KYC) norms will be the same as that for purchase of physical gold. KYC documents such as Voter ID, Aadhaar card/PAN or TAN /Passport will be required.
16Tax TreatmentThe interest on Gold Bonds shall be taxable as per the provision of Income Tax Act, 1961 (43 of 1961) and the capital gains tax shall also remain same as in the case of physical gold.
17TradeabilityBonds will be tradable on exchanges/NDS-OM from a date to be notified by RBI.

Source :- www.rbi.org.in

 

Dec 232013
 

The Government of India has decided to issue Inflation Indexed National Savings Securities which is aimed at an alternative instruments to hedge the rate of inflation. This issue is intended for Retail Investors and are linked to the Consumer Price Index (CPI) (Base : 2010=100).

The FAQs of Inflation Indexed National Savings Securities are given below :-

1. Who is eligible to invest in the Inflation Indexed National Saving Securities-Cumulative (IINSS-C)?

  • Only retail investors would be eligible to invest in these securities. The retail investors would include individuals, Hindu Undivided Family (HUF), charitable institutions registered under section 25 of the Indian Companies Act and Universities incorporated by Central, State or Provincial Act or declared to be a university under section 3 of the University Grants Commission Act, 1956 (3 of 1956).

2. What is the interest rate on these securities?

  • There will be two parts in the interest rate. One, fixed rate of 1.5% per annum and second, inflation rate.
  • For example, if inflation rate during the six months is 5%, then interest rate for this six months would be 5.75% (i.e. fixed rate -0.75% and inflation rate -5%).

3. Is there any floor as inflation may turn into deflation at times?

  • Yes, fixed rate of 1.5% would act as a floor, which means that 1.5% per annum interest rate is guaranteed if there is deflation.
  • For example, if inflation rate is (-) 5%, then interest rate should be (-) 3.5% by simple calculation. But in such case, negative inflation will not be recognised and investors would get fixed rate of 1.5% (please see example 2 at 23).

4. When do I get interest?

  • Interest will be accrued and compounded in the principal on half-yearly basis and paid along with principal at the time of redemption.

5. What will I get on redemption?

  • On redemption, investors will get principal and compounded interest

6. What is the inflation index to which inflation rate will be linked?

  • Inflation rate will be based on the final combined Consumer Price Index [(CPI) base: 2010=100].
  • The final combined CPI will be used as reference CPI with a lag of three months. For example, the final combined CPI for September 2013 will be used as reference CPI for whole of December 2013.

7. What will be the process of investing?

  • Investors can invest through the authorised banks and Stock Holding Corporation of India (SHCIL).
  • They will fill an application form and submit the same along with other documents and payment to the bank.
  • On receipt of money, the bank will register the investor on the RBI’s web-based platform (E-Kuber) and on validation, generate the Certificate of Holding.

8. What will be the form of these securities?

  • These securities will be issued in the form of Bonds Ledger Account (BLA) The securities in the form of BLA will be issued and held with RBI and thus, RBI will act as central depository.
  • A certificate of holding will be issued to the holder of securities in BLA.

9. Which are the authorised banks?

  • The authorised banks are SBI & Associates, Nationalised Banks, HDFC Bank, ICICI Bank, and Axis Bank.

10. Should the customer apply through the bank in which he/she has an account?

  • Customers can approach any of the authorised banks, including SHCIL for such investment irrespective of whether they hold an account or not with that bank.

11. Who will provide the other customer services to the investors after issuance of securities?

  • The banks through which these securities have been purchased will provide other customer services.
  • Investors can approach the banks for other services such as change of address, early redemption, nomination, lien marking, etc.

12. Whether joint holding will be allowed?

  • Yes, joint holding will be allowed.

13. What is the minimum and maximum limit for investment?

  • The minimum investment limit is Rs. 5,000/- (five thousand).
  • The maximum limit is Rs. 500,000/- (five lakh) per applicant per annum.

14. Whether premature redemption is allowed?

  • Yes premature redemption is allowed.
  • For senior citizens above 65 years, the premature redemption is allowed after one year. For others, it is allowed after 3 years.
  • Penalty at the rate of half of the last payable coupon will be charged from the investors. For example, if last payable coupon is Rs. 1,000/-, then Rs. 500 would be charged as penalty.

15. How do I redeem these securities?

  • In case of redemption prematurely before the maturity date, investors can approach the concerned bank few days before the coupon date and apply.
  • In case of redemption on maturity, the investor will be advised one month before maturity regarding the ensuing maturity of the bond advising them to provide a Letter of Acquaintance, confirming the NEFT account details, etc. If everything is in order the investor has to be paid within maximum five days of the maturity (to take care of any payment in the form of physical instrument).

16. Whether these securities transferable?

  • Transferability is allowed to the nominee(s) only for individual investors on death of holder.
  • Transferability is not allowed for other investors

17. Can I use these securities as collateral for loans?

  • Yes, these securities are eligible to be used as collateral for loans from banks, financial Institutions and Non Banking Financial Companies, (NBFC).

18. What are the tax implications?

  • Existing taxation applicable to Government of India securities issued as part of the market borrowing will be applicable to these securities.

19. Whether TDS will be applicable?

  • Existing taxation applicable to Government of India securities will be applicable to these securities.
  • Sub-section (iv) of the Section 193 of the Income Tax Act, 1961 stipulates that no tax shall be deducted from any interest payable on any security of the Central Government or a State Government, provided that nothing contained in this clause shall apply to the interest exceeding rupees ten thousand payable on 8% Savings (Taxable) Bonds, 2003 during the financial year.
  • As per the above Section, TDS shall not be deducted from any interest payable on IINSS-C, until and unless notified by the Government of India otherwise.

20. Who will do the KYC?

  • As customers will be owned by the banks, KYC will also be done by the banks.

21. When will customers be issued securities?

  • The customers should be issued the securities after receiving clear money. After receiving clear money, banks should register the customer on CBS and generate Certificate of Holding.

22. Where can investors get the application form?

  • The application form can be downloaded from the RBI’s website. However, banks shall also get forms printed and made available to the investors.

23. An example of cash flows/ compounding of principal for illustration purpose is as under:

Example 1: Fixed rate 1.5% per annum

Issue/ Coupon/ maturity date

Fixed rate

CPI

Inflation rate

Interest rate (Compounding rate)

Principal

I

II

III

IV

V=II+IV

VI=VI*V

25-Dec-13

150

5000

25-Jun-14

0.75

160

6.67

7.4

5371

25-Dec-14

0.75

166

3.75

4.5

5613

25-Jun-15

0.75

175

5.42

6.2

5959

25-Dec-15

0.75

185

5.71

6.5

6344

25-Jun-16

0.75

190

2.70

3.5

6563

25-Dec-16

0.75

200

5.26

6.0

6958

25-Jun-17

0.75

210

5.00

5.8

7358

25-Dec-17

0.75

218

3.81

4.6

7693

25-Jun-18

0.75

228

4.59

5.3

8104

25-Dec-18

0.75

235

3.07

3.8

8414

25-Jun-19

0.75

246

4.68

5.4

8870

25-Dec-19

0.75

255

3.66

4.4

9262

25-Jun-20

0.75

265

3.92

4.7

9694

25-Dec-20

0.75

280

5.66

6.4

10316

25-Jun-21

0.75

290

3.57

4.3

10761

25-Dec-21

0.75

305

5.17

5.9

11399

25-Jun-22

0.75

316

3.61

4.4

11895

25-Dec-22

0.75

330

4.43

5.2

12512

25-Jun-23

0.75

340

3.03

3.8

12985

25-Dec-23

0.75

355

4.41

5.2

13655

 

Example 2: Fixed rate 1.5% per annum

Issue/ Coupon/ maturity date

Fixed rate

CPI

Inflation rate

Interest rate (Compounding rate)

Principal

I

II

III

IV

V=II+IV

VI=VI*V

25-Dec-13

150

5000

25-Jun-14

0.75

160

6.67

7.42

5371

25-Dec-14

0.75

166

3.75

4.50

5613

25-Jun-15

0.75

160

-3.61

0.75

5655

25-Dec-15

0.75

150

-6.25

0.75

5697

25-Jun-16

0.75

160

6.67

7.42

6120

25-Dec-16

0.75

165

3.13

3.88

6357

25-Jun-17

0.75

168

1.82

2.57

6520

25-Dec-17

0.75

175

4.17

4.92

6841

25-Jun-18

0.75

170

-2.86

0.75

6892

25-Dec-18

0.75

175

2.94

3.69

7146

25-Jun-19

0.75

180

2.86

3.61

7404

25-Dec-19

0.75

190

5.56

6.31

7871

25-Jun-20

0.75

188

-1.05

0.75

7930

25-Dec-20

0.75

195

3.72

4.47

8285

25-Jun-21

0.75

200

2.56

3.31

8559

25-Dec-21

0.75

205

2.50

3.25

8837

25-Jun-22

0.75

215

4.88

5.63

9335

25-Dec-22

0.75

220

2.33

3.08

9622

25-Jun-23

0.75

230

4.55

5.30

10131

25-Dec-23

0.75

220

-4.35

0.75

10207

Courtesy :- www.rbi.org.in

Apr 122012
 

The Department of Industrial Policy & Promotion, Government of India has issued a new FDI policy circular (Circular 1 of 2012) with the updated details of the policy of the Government of India with regard to Foreign Direct Investments (FDI) in India.

Click here to download the FDI Circular.

Mar 232012
 

SPECIAL DEPOSIT SCHEME FOR NON-GOVERNMENT PROVIDENT, SUPERANNUATION AND GRATUITY FUNDS – NOTIFIED RATE OF INTEREST ON SUCH DEPOSITS

NOTIFICATION NO.5(4)-B(PD)/2011, DATED 13-3-2012

It is hereby notified that the deposits made under the Special Deposit Scheme for Non-Government Provident, Superannuation and Gratuity Funds, announced in the Ministry of Finance (Department of Economic Affairs) Notification No. F. 16(1)-PD/75, dated 30th June, 1975, shall with effect from 1st December, 2011 and until further orders, bear interest at 8.6% (eight point six per cent) per annum.

Mar 222012
 

Credit card usage is in India is in increasing trend over the years. The plastic money offers vide range of facilities and comfort apart from avoiding the risk of carrying money in hand. Credit cards if used wisely can aid you manage your finances effectively. But on the other hand, the usage of credit cards without knowing the implications of the same will end you up in greater trouble.

One of the options offered by the Credit card companies to its card holders is the scheme of payment of “Minimum due amount”. The credit card companies fix a minimum sum that needs to be paid in a month in order to maintain the good status of the Credit Cards. For example, the minimum payment due will be 5% of the total amount due (or) Rs. 500/- whichever is higher. Assuming that there is an outstanding in the Credit card amounting to Rs. 20000/-, it will be enough if the credit card holder pays only Rs. 500/- to maintain the good standing of the credit card account. It looks very simple and very easy for the credit card holders. Many credit card holders presume that by payment of the minimum payment due, the entire outstanding can be cleared in a mater of 20 months (20 months x 5% of outstanding = 100% of outstanding). But the reality is not known by many of the credit card holders. Unknowingly, may card holders choose to pay the minimum amount due and at one point of time, unable to make the payment due, gets into the debt trap. Getting caught in a debt trap will be a worst situation and the credit worthiness of the the card holders will so be in stake. This will also lead to deactivation of the credit card and a bad credit rating in the CIBIL report, which is likely to affect the future borrowings of the credit card holder.

The following table explains the real situation :-

Credit card outstanding Amount   :-       Rs.20000/-

Minimum Amount due                 :-       5% of the outstanding ,  minimum of Rs.500/-

Rate of Interest                          :-       3.35% per month

 

Months

Purchases/
Opening
Balance
Minimum
Amount
Due paid
Interest
@ 3.35% p.m
Service Tax
@ 10.3%
Total
Interest &
Tax
Principal Closing
Balance

1

20000

1000

670

69

739

261

19739

2

19739

987

661

68

729

258

19481

3

19481

974

653

67

720

254

19227

4

19227

961

644

66

710

251

18976

5

18976

949

636

66

702

247

18729

6

18729

936

627

65

692

244

18485

7

18485

924

619

64

683

241

18244

8

18244

912

611

63

674

238

18006

9

18006

900

603

62

665

235

17771

10

17771

889

595

61

656

233

17538

11

17538

877

588

61

649

228

17310

12

17310

866

580

60

640

226

17084

13

17084

854

572

59

631

223

16861

14

16861

843

565

58

623

220

16641

15

16641

832

557

57

614

218

16423

16

16423

821

550

57

607

214

16209

17

16209

810

543

56

599

211

15998

18

15998

800

536

55

591

209

15789

19

15789

789

529

54

583

206

15583

20

15583

779

522

54

576

203

15380

21

15380

769

515

53

568

201

15179

22

15179

759

508

52

560

199

14980

23

14980

749

502

52

554

195

14785

24

14785

739

495

51

546

193

14592

25

14592

730

489

50

539

191

14401

26

14401

720

482

50

532

188

14213

27

14213

711

476

49

525

186

14027

28

14027

701

470

48

518

183

13844

29

13844

692

464

48

512

180

13664

30

13664

683

458

47

505

178

13486

31

13486

674

452

47

499

175

13311

32

13311

666

446

46

492

174

13137

33

13137

657

440

45

485

172

12965

34

12965

648

434

45

479

169

12796

35

12796

640

429

44

473

167

12629

36

12629

631

423

44

467

164

12465

37

12465

623

418

43

461

162

12303

38

12303

615

412

42

454

161

12142

39

12142

607

407

42

449

158

11984

40

11984

599

401

41

442

157

11827

41

11827

591

396

41

437

154

11673

42

11673

584

391

40

431

153

11520

43

11520

576

386

40

426

150

11370

44

11370

569

381

39

420

149

11221

45

11221

561

376

39

415

146

11075

46

11075

554

371

38

409

145

10930

47

10930

547

366

38

404

143

10787

48

10787

539

361

37

398

141

10646

49

10646

532

357

37

394

138

10508

50

10508

525

352

36

388

137

10371

51

10371

519

347

36

383

136

10235

52

10235

512

343

35

378

134

10101

53

10101

505

338

35

373

132

9969

54

9969

500

334

34

368

132

9837

55

9837

500

330

34

364

136

9701

56

9701

500

325

33

358

142

9559

57

9559

500

320

33

353

147

9412

58

9412

500

315

32

347

153

9259

59

9259

500

310

32

342

158

9101

60

9101

500

305

31

336

164

8937

61

8937

500

299

31

330

170

8767

62

8767

500

294

30

324

176

8591

63

8591

500

288

30

318

182

8409

64

8409

500

282

29

311

189

8220

65

8220

500

275

28

303

197

8023

66

8023

500

269

28

297

203

7820

67

7820

500

262

27

289

211

7609

68

7609

500

255

26

281

219

7390

69

7390

500

248

26

274

226

7164

70

7164

500

240

25

265

235

6929

71

6929

500

232

24

256

244

6685

72

6685

500

224

23

247

253

6432

73

6432

500

215

22

237

263

6169

74

6169

500

207

21

228

272

5897

75

5897

500

198

20

218

282

5615

76

5615

500

188

19

207

293

5322

77

5322

500

178

18

196

304

5018

78

5018

500

168

17

185

315

4703

79

4703

500

158

16

174

326

4377

80

4377

500

147

15

162

338

4039

81

4039

500

135

14

149

351

3688

82

3688

500

124

13

137

363

3325

83

3325

500

111

11

122

378

2947

84

2947

500

99

10

109

391

2556

85

2556

500

86

9

95

405

2151

86

2151

500

72

7

79

421

1730

87

1730

500

58

6

64

436

1294

88

1294

500

43

4

47

453

841

89

841

500

28

3

31

469

372

90

372

385

12

1

13

372

0

Total

33381

3434

36815

20000

Total Int & Principal

56815

The perusal of the above table reveals the following :-

1)     It will take 90 months (7 ½ Years) to clear the outstanding amount.

2)     The total amount paid in these periods work out to 56815/- which is more than double the amount borrowed.

3)     If in any any of the months, if the minimum amount due is not paid, the card holder has to pay additional fees and penal charges.

4)     It is assumed that the credit card holder does not make any further purchases in the credit card. If there are any additional purchases during the month, the minimum due amount and interest payout will be much higher.

How to come out of this situation :-

1)     Credit card is not an alternative for money. Consider it as another form of money. Hence, use it only when you have it (ie., have cash balance).

2)     Due to unavoidable circumstances, if you are not able to pay the entire credit card outstanding, try to convert the big purchases into EMIs , if the rate of interest on EMI is less than the rate of interest on credit card outstanding.

3)     If possible, go for either personal loan (or) Jewel loan and close the entire outstanding and start paying the personal loan / Jewel Loan in EMIs. This will considerably reduce the Interest burden and you will be out of the debt much earlier than the tenure if you pay through the minimum due method.

4)     Last but not the least, use the credit card only when it is absolutely necessary.

Instead of getting into the trap and then blaming the Credit card companies, let us use the credit cards wisely and reap the benefits the plastic money offers.

Feb 252012
 

Due to many number of requests from our readers, we are herewith providing the download links for the various tools provided by us in our post dated 21st Feb 2012.

Hope these tools are useful to you.

Click here send your comments/suggestions

 

Feb 212012
 

Very often we come across advertisements which offer lower rate of interest rate on loans. Many times, the lending institutions resort to advertising rate of interest with a asterisk mark and the asterisk mark will say that the rate of interest is a Flat rate. Some lenders advertise their loan products at Diminishing rate of interest. As a wise investor/borrower understanding both these types of Interest calculations will help you make correct decisions.

Flat rate method

Flat rate of interest is a simple rate of interest calculated on the full loan amount without giving effect to the amount of loan repaid.

Diminishing/Reducing Balance Method

On the other hand, diminishing/reducing rate of interest gives effect to the amount of loan repaid.

We will take the following calculation :-

Loan Amount              Rs 100000/-

Tenure                         5 Years

Rate of Interest           10% p.a.

Flat rate Method

Interest Amount          =          Rs. 50000/-

(100000 x 10% x 5)

EMI Amount              =          Rs. 2500/- per month for 5 years

(Rs. 150000 / 60 months)

 

Diminishing/Reducing method 

EMI Amount              =          Rs. 2125/-

Total Amount paid      =          Rs. 127500/-

Interest Amount          =          Rs. 27500/-

The difference in Interest amount under both the methods is on account of the fact that under reducing/diminishing balance method, the principal repaid every month is taken into account for Interest/EMI calculation and as a result, the total interest amount under reducing balance is lesser than that of the interest as per Flat method.

We provide herewith the following tools for various calculations :-

1)      Tool to Find out rate of Interest from EMI

2)      Flat rate to Diminishing rate covertor

3)      Diminishing rate to Flat rate convertor

Hope these tools will serve as an aid to make your decisions.

Click here to send your enquiry/feedback

Worksheet to find out Rate of Interest from EMI      

Flat rate to Diminishing Rate Convertor 

Diminishing Rate to Flat rate Convertor 

Jan 242012
 

Indian Railway Finance Corporation Ltd

Brief Introduction of the company:

Ø Financing arm of the Indian Railways, notified as a Public Financial Institution under Section 4A of the Companies Act, 1956.

Ø Registered as a NBFC-ND-IFC (Infrastructure Finance Company) with Reserve Bank ofIndia. 100% shareholding held by Government of India. Consistently profit making Public Sector Undertaking. Consistently rated ‘AAA’ by CRISIL, ICRA and CARE

Ø Impeccable track record of funding rolling stock asset creation worth Rs. 60,163 crore (5,060 locomotives, 32,115 passenger coaches and 1,39,659 freight cars) for Indian Railways so far, besides providing funding support of Rs. 2,294 crore to other Railway entities such as Rail Vikas Nigam Ltd., Rail Tel Corporation of India Ltd. Etc

Ø Networth as on September 30, 2011 is Rs 4487.49 crores. Net Profit after Tax as on September 30, 2011 is 201.52 crores and it stood at Rs.485.20 crores for year ended March 31, 2011 compared to Rs 442.69 crore in March 31, 2010.

Strengths

Assured net interest margin: The Company’s cost plus based lease agreement with the MoR (Ministry of Railways) ensures a net interest margin.

The Company enjoys a strategically important position in the Indian railway sector: The Company is wholly owned by the Government of India. The Company is a public financial institution and a non-banking financial company providing fund based support for the development of the Indian Railways.

Consistent track record of not having any non performing assets: As of September 30, 2011, IRFC do not have any non performing assets. All its loans and receivables accrue from the MoR and other related entities like RVNL, Pipavav Railway and RailTel.

Consistent financial performance: The Company has demonstrated consistent growth in its profitability. In addition, the Company has low establishment, overhead and administrative expenses and the Company’s operational efficiency is high, which results in increased profitability.

Low cost of borrowings: The Company’s costs of incremental borrowings were 7.62%, 7.70% and 8.98% in FY 2011, FY 2010 and FY 2009 respectively, which are relatively low with its peer group.

 

Issue details: Issuer Indian Railway Finance Corporation Limited
Issue of Bonds Secured, Redeemable, Non-Convertible bonds in the nature of debentures, having benefits under section 10(15)(iv)(h) of the Income Tax Act, 1961
Issue Size ` 3,000 crores with an option to retain oversubscription up to ` 6,300 crores (Shelf-limit)
Issue Open Date 27th January, 2012
Issue Closing Date 10th February, 2012
Face Value (Rs.) ` 1,000 per Bond
Minimum Application ` 10000 (10 Bonds) & in multiples of ` 5000 (5 Bonds)
Tenor/Redemption Date 10 Years and 15 Years from the deemed date of allotment
Ratings CRISIL AAA/Stable” by CRISIL, “CARE AAA” by CARE & “ICRA AAA” by ICRA
Security Charge on the movable assets comprising of rolling stock such as wagons, locomotives and coaches by way of first/ pari passu charge, present and future, as may be agreed between IRFC and the Trustee, pursuant to the terms of the Debenture Trust Deed
Trading Compulsorily in dematerialized form
Issuance In dematerialized form as well as physical form, at the option of Applicants.
Lead Managers A. K. Capital Services Ltd., SBI Capital Markets Ltd. & ICICI Securities Ltd.
Depository National Securities Depository Ltd. and Central Depository Services (India) Ltd
Trustee Indian Bank
Allocation Category I (QIB+ Corporate)- up to 45%

Category II (Individual above 5 Lakhs)- up to 25%

Category III (Individual below 5 Lakhs)- up to 30%

Listing Proposed to be listed on BSE & NSE
Interest on Application Money used towards allotment of bonds @ 8.00% p.a. on the amount for which Bonds are allotted to the Applicants subject to deduction of income tax under the provisions of the Income Tax Act, 1961, as amended, from the date of realization of the cheque(s)/ demand draft(s) or 3 (three) days from the date of banking of the application (being the date of submission of each application as duly acknowledged by the Bankers to the Issue) whichever is later, upto one day prior to the Deemed Date of Allotment
Interest on Application Money which is liable to be refunded @ 4.00% p.a. on application money that is liable to be refunded to the Applicants in accordance with the provisions of the SEBI Debt Regulations, or other applicable statutory and/or regulatory requirements, subject to deduction of income tax under the provisions of the Income Tax Act, 1961, as amended, from the date of realization of the cheque(s)/ demand draft(s) or 3 (three) days from the date of receipt of the application (being the date of presentation of each application as acknowledged by the Bankers to the Issue) whichever is later, upto one day prior to the Deemed Date of Allotment. Provided that IRFC shall not be liable to pay any interest on monies liable to be refunded in case of (a) invalid applications or applications liable to be rejected, and/or (b) applications which are withdrawn by the applicant.

Highlights of Tax Benefits

Ø The income by way of interest on these Bonds is fully exempt from Income Tax and shall not form part of Total Income as per provisions under section 10 (15) (iv) (h) of IT Act.

Ø There will be no deduction of tax at source from the interest, which accrues to the bondholders on these bonds irrespective of the amount of the interest or the status of the investors.

Ø Wealth Tax is not levied on investment in Bonds under section 2(ea) of the Wealth-tax Act, 1957.

The issue Options I II
Tenor 10 Years 15 Years
Face Value(Rs./Bond) `1,000.00 `1,000.00
Minimum Application Size ` 10000 or 10 Bonds ` 10000 or 10 Bonds
In Multiples of ` 5000 or 5 Bonds ` 5000 or 5 Bonds
Coupon Rate (%)p.a.
Retail (Category III) 8.15%* 8.30%*
Others (Category I & II) 8.00% 8.10%
Interest Payment Annually Annually
Interest Payment Date October 15, every year October 15, every year
Redemption Date 10 Years from the Deemed Date of Allotment 15 Years from the Deemed Date of Allotment
Maturity Amount Face Value + Interest Accrued at the Redemption Date Face Value + Interest Accrued at the Redemption Date

 

*The coupon rates of 8.15% p.a. and 8.30% p.a. shall be payable only to the original allottees under Category III for the Tranche 1 and Series I Bonds and Tranche 1 and Series II Bonds respectively and shall not be payable to the transferees in case the Bonds are transferred or sold by the original allottee. In such case, the transferees shall be entitled to receive coupon rates of 8.00% p.a. and 8.10% p.a. for the Tranche 1 and Series I Bonds and Tranche 1 and Series II Bonds respectively. However, in case of any transfer by a permanently disabled allottee to their legal heir(s), the transferee shall continue to be entitled to receive interest at the coupon rate of 8.15% p.a. and 8.30% p.a., for the Tranche 1 and Series I Bonds and Tranche 1 and Series II Bonds respectively. Where the Bonds are held in joint names and subsequently there is a change in the sequence of the names of the joint holders, the joint holders subsequent to such change in sequence of names, will be entitled to receive the interest at the coupon rate of 8.00% p.a. and 8.10% p.a., for the Tranche 1 and Series I Bonds and Tranche 1 and Series II Bonds respectively. However, in case of change in name of any of the joint holders, such joint holders shall continue to be entitled to receive interest at the coupon rate of 8.15% p.a. and 8.30% p.a., for the Tranche 1 and Series I Bonds and Tranche 1 and Series II Bonds respectively. In case of transmission of the Bond(s) in accordance with the Articles of Association of the Company, to the nominee in the event of demise of the Bondholder (single or joint holders) who was originally allotted Bonds under Category III, the new Bondholder (single or joint holders) shall continue to be entitled to receive interest at the coupon rate of 8.15% p.a. and 8.30% p.a., for the Tranche 1 and Series I Bonds and Tranche 1 and Series II Bonds respectively. For the purpose of classifying the investors into various categories, the applications will be consolidated on the basis of PAN. Consequent to such consolidation of applications, if an Applicant falls in any category other than Category III, such Applicant will not be entitled to receive the coupon rate of 8.15% p.a. and 8.30% p.a. for Tranche 1 Series I Bonds and Tranche 1 Series II Bonds respectively.

^ The Company shall allocate and allot Bond Series bearing longest maturity to all valid applications, wherein the Applicants have not indicated their choice of the relevant Bond Series in their Application Form.

 

Who Can Apply?

Ø Category I: QIB and Corporates

Ø Category II: Resident Indian individuals; Hindu Undivided Families through the Karta

Ø Non Resident Indians on repatriation as well as non-repatriation basis (Above Rs.5 Lakhs)

Ø Category III: Resident Indian individuals; Hindu Undivided Families through the Karta

Ø Non Resident Indians on repatriation as well as non-repatriation basis (Up to Rs.5 Lakhs)

 

Cheque/DD’s to be Crossed A/C payee & drawn in favour of:

For Non NRI’s “IRFC Tax Free Bonds – Escrow Account – Tranche I”

For NRI’s “IRFC Tax Free Bonds – NRI Escrow Account – Tranche I”

For FII’s “IRFC Tax Free Bonds – FII Escrow Account – Tranche I”

IMPORTANT: Please read the Prospectus of this issue carefully before investing in the same.

 

 

Disclaimer

The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither we nor any person connected with any our company accepts any liability arising from the use of this information and views mentioned in this document.

Contact us @ 91-44-45540180 / 91-91505 75680. For Quick Response email :- sridharca@gmail.com

Subscribe to our email alerts and get updates on taxation,company law,VAT,RBI Guidelines, Service Tax, etc., instantly in your mail box..
LinkedIn Auto Publish Powered By : XYZScripts.com

Subscribe to our Email alerts for getting regular updates on Income-tax, Corporate Law, Tax Planning, VAT , Service Tax,Investments, RBI Guidelines, VAT Laws , etc.,

Enter your email address: Delivered by FeedBurner   
%d bloggers like this: