Salary tax rebate upto Rs.20000 – Infra bonds – Power finance corporation-2011-12


Company: Power Finance corporation.

Coupon rate-  8.50%
for 10 years and 8.75% for 15 years.

Issue opens on:  29th Sep 2011 to 04.11.2011

Cost of each bond : Rs.5000

Those individuals who are salary earners, these bonds purchased upto Rs.20000 can give tax rebate of eligible rate under Sec. 80 CCF
as well as coupon rate of 8.50-8.75% . This rebate is above Rs.one lakh rebate under sec.80C.

C.R. Venkata Ramani

(AICWA)

Advertisements

6 thoughts on “Salary tax rebate upto Rs.20000 – Infra bonds – Power finance corporation-2011-12

  1. Dear Mr Ramani,
    Whether Power Finance Corp bond can be purchased by an NRI and claim under 80CCF ?

    Is there any other such bonds currently available ?

    1. No. Infra structure bonds which are giving income tax benefits cannot be purchased by NRI. So NRI cannot subscribe to PFC bonds. If you are interested in other bonds which are meant for NRI also, then I can inform you if you are interested.

      venkat

  2. Income tax benefit under Sec 80 CCF ( Max. Rs.20000)

    Name of the company: Power Finance Corporation (Navratna company of GOI)
    Issue opened on:29.9.2011 and closes on 4th Nov2011.
    Good credit rating of AAA with stable outlook.
    Series 1 and Series 2 of Rs.5000/- face value with 8.50% p.a. payable on Annual and Cumulative basis respectively with maturity of ten years
    Series 2 and Series 4of Rs.5000 face value with 8.75% p.a. payable on Annual and Cumulative basis respectively with maturity of fifteen years
    At the end of 5 years from the Allotment Date for Series 1 and Series 2, buy back option is available.
    At the end of 7 years from the Allotment Date for Series 3 and Series 4 , buy back option is available.
    The Bonds will be listed on the BSE and can be traded only in the demat form after the 5- year lock-in period. So it is better to buy bonds in demat form.
    For a period of 5 years from the deemed date of allotment, lock in period exists and no loan can be availed or bonds can be encashed. Investors can mortgae or pledge the bonds for taking loans after 5 years.Bonds can be purchased in paper form also but it is not desirable.
    As per the current provisions of the Income Tax Act, 1961, for Bonds held in demat form, no TDS will be deducted on interest payments .

    Many banks like ICICI bank are accepting money for issuing bonds.So salary earners can get benefits above Rs.100000 u/s 80 C upto Rs.20000 (i.e.120000) under sec.80CCF in their income tax range whether it is 10% or 20% or 30%.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s