Every year in the month of October, the corporation offers an interest rate of 8%. The bonds will maturity in February 2022, although as previously stated, they can be sold through the country’s numerous stock exchanges.
The bonds are rated AAA and provide investors with tax-free income. Because IRFC is a government-owned company, there are no concerns about the instrument’s security. It’s worth noting that the bonds’ current market price is Rs 1,053, compared to the issuance price of Rs 1,000. Your yields tend to fall if you buy the bonds at a higher rate. So, if you bought them right now, your yield would be roughly 7.56 percent.
How do I go about purchasing tax-free bonds?
These tax-free bonds are available in both physical and demat form to investors. The subscription period for tax-free bonds is open for a limited time, and you must purchase these bonds within that time frame. If the bonds are purchased in tangible form, the investor must provide his or her Permanent Account Number (PAN).
Are IRFC bonds tax-exempt?
After a hiatus, the Indian Railways Finance Corporation (IRFC) will launch its fourth tax-free bond offering of 2015 on Tuesday. The offer, which has been awarded the highest AAA rating by credit rating agencies, is raising 4,532 crore for IRFC, the finance arm of Indian Railways.
Retail investors (those who invest less than ten lakh rupees) would receive 40% of the issuance.
The issue will expire on December 21, however it may close sooner if it is fully subscribed.
Possibility of signing up on the first day Based on previous years’ experiences, the issue may be oversubscribed on the day of its release. The bonds will be distributed according to the order in which they are received. The minimum investment is $5,000 ($1,000 divided by five bonds).
Retail investors can get 7.32 percent on 10-year bonds, 7.53 percent on 15-year bonds, and 7.5 percent on 20-year bonds from the IRFC. Across tenures, other investors will receive 0.25 percentage points less. Interest will be paid out on a yearly basis and is tax-free.
The tax-free bond rates given by IRFC are greater than those offered by REC in its previous offering. This is because the G-Sec yield, which is related to the rates of tax-free bond offerings, has risen in the last month.
This is in expectation of the US Federal Reserve boosting interest rates at its next meeting. However, after the uncertainty around the US Fed rate hike has passed, the G-Sec yield in India may drop in the coming week as the domestic economy improves. As a result, rather than waiting for future bond issuance, it makes sense to invest in IRFC’s bonds.
It’s good for a slab that’s worth 20% or more. The bonds are available to investors in higher tax brackets looking for safe, long-term investments. One, the ‘AAA’ rating denotes the highest level of safety. Next, bonds outperform bank deposits, which at best provide around 6% post-tax returns for investors in the 30% tax band and roughly 7% for those in the 20% tax bracket. However, investors in the 10% tax bracket should avoid the IRFC bond because bank deposits may still provide greater post-tax returns.
Those in higher tax brackets might opt for IRFC’s 15-year bond, which has the highest interest rate (7.53 per cent for retail investors). This rate is identical to the high rate offered by NTPC’s first tax-free bond sale this year.
But first, set aside $1.5 lakh to invest in a PPF, which pays a better 8.7% tax-free return compounded annually and also qualifies for a Section 80C tax deduction (unlike tax-free bonds).
What does the IRFC’s future hold?
IRFC is the Indian Railways’ dedicated market borrowing arm. According to observers, the Railways’ enormous growth plans in the future will require large money, and the operation of IRFC will expand dramatically. The company’s fortunes are tied to the Indian Railways’ capital plans, which is a disadvantage.
Anand Rathi Financial Services analysts have also given IRFC a’subscribe’ rating. “At current pricing, we believe the company is fairly priced and has a good creditworthiness.” Analysts stated that it is “very dependent on Indian Railways’ capital intentions.”
How can I purchase infrastructure bonds in 2021?
If you have a demat account, you can apply to invest in an infrastructure bond online. You must complete an online application form.
These relationships can be applied for in a physical form. You’ll need a PAN card that has been self-attested. As part of the KYC (Know Your Customer) procedure, you must provide proof of identity and address.
After the lock-in period has expired, these bonds can be exchanged on stock exchanges like stocks.
What is the procedure for obtaining REC bonds?
These Capital Gain bonds can be purchased directly the NHAI/REC or from registered bond dealers. There is no way to buy these bonds online, so you’ll have to go to their office and fill out a paper form.
Are there any bonds that are tax-free?
A government entity issues tax-free bonds to raise revenue for a specific purpose. Municipal bonds, for example, are a type of bond issued by municipalities. They have a fixed rate of interest and rarely default, making them a low-risk investment option.
The most appealing aspect, as the name implies, is the absolute tax exemption on interest under Section 10 of the Income Tax Act of India, 1961. Tax-free bonds often have a ten-year or longer maturity period. The money raised from these bonds is invested in infrastructure and housing initiatives by the government.
What is the procedure for purchasing NHAI tax-free bonds?
What is the procedure for purchasing NHAI bonds?
- Make a check or demand draft in the name of the “National Highway Authority of India” with the words “Account payee only” struck off.