Power Finance Corporation (PFC) declared the launch of its income tax saving infrastructure bond with the offering set to raise Rs 5300 crore, the biggest among all recent bond issuances.
The bond will be issued in one or two tranches and will have a face value of Rs 5000. The public issue of secured, redeemable, non-convertible debentures of face value of Rs 5,000 each, will open for subscription on Feb 24 and closes on Mar 22. The bond issue is under Sec 80CCF of the Income Tax Act, wherein an investor can avail a deduction of up to Rs 20,000 in the taxable income for the current financial year.
The company is offering the bonds which will have a fixed rate of interest up to 8.5 per cent and will be payable on annual or cumulative basis. The bonds offered will be in maturities of 10 years and 15 years with a buyback option after five and seven years respectively. The bond can be held in both physical and demat form
Features of Bond
Duration: 10 years and 15 years
Interest Rate 8.3% for 10 years and 8.5% for 15 years
Minimum Investment Two Bonds in multiple of one bond thereafter, maximum no limit.
Deduction U/S 80CCF of Rs 20000.00 addition to Rs 100000.00 in 80C
Interest rate upto 8.5%
Buy back facility available after 5 years and 10 years for 10 year and 15 year bond respectively
Available in both Physical and Demat Mode
Lockin period 5 years
Will be listed in BSE
Safety: rating AAA /Stable’ by CRISIL ‘CARE AAA’ by CARE
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 :-
Slab 10.3% : Rs 2,060
Slab 20.6% : Rs 4,180
Slab 30.9% : Rs 6,180
