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India Announces Tax-Free Bond Issue

by Lorys Charalambous, Tax-News.com, Cyprus

13 November 2012


The Indian Income Tax Department has issued a notification concerning 10 infrastructure companies that will be allowed to issue tax-free bonds during the rest of the current financial year.

The bonds, which will be for ten, fifteen, or twenty years, are intended to raise INR535bn (USD10bn), and are available to retail individual investors, qualified institutional buyers, corporates, and high net worth Individuals. Each company must raise 75% of their allotted amount through public issues, of which 40% is to be reserved for retail investors.

However, interest on the bonds will capped at a rate determined by the Government security (G-sec) rate, the credit rating of the issuer, and the category of the investor. This means that the interest offered will be between 7.5% and 8%.

The ten companies are as follows: The National Highways Authority of India; the Indian Railway Finance Corporation Ltd; the India infrastructure Finance Company Ltd; the Housing and Urban Development Corporation Ltd; the National Housing Bank; the Power Finance Corporation; the Rural Electrical Corporation; the Jawaharlal Nehru Port Trust; the Dredging Corporation of India Ltd; and Ennore Port Ltd.

TAGS: Finance | tax | investment | India | interest | retail

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