New Delhi : The Government allowed seven state-owned entities, including NHAI, IRFC and NTPC, to raise Rs 40,000 crore in the current fiscal through tax-free bonds.
The National Highways Authority of India has been permitted to raise Rs 24,000 crore and Indian Railways Finance Corporation Rs 6,000 crore, said a notification issued by the Central Board of Direct Taxes (CBDT).
Housing and Urban Development Corporation has been allowed to raise Rs 5,000 crore and Indian Renewable Energy Development Agency, Rs 2,000 crore. NTPC, Power Finance Corporation and Rural Electrification Corporation can issue tax-free bonds of Rs 1,000 crore each.
Retail investors, which include HUFs and NRIs investing on repatriation basis, can invest up to Rs 10 lakh in such bonds. Those investing higher amount would be classified as HNIs.
The bonds will have a tenure of 10, 15 or 20 years and the interest rates is to be decided with reference to the rates of Government Securities. The coupon rate for below ‘AAA’ rated bonds could go up to 20 basis points above the rates offered for the bonds with highest rating.
Interest earned through tax-free bonds, which are usually issued by PSUs to raise long-term funds, do not attract tax.
Finance Minister Arun Jaitley had announced in the Budget 2015-16 that he would permit PSUs to raise funds through tax- free bonds for development of infrastructure.
