As per the prospectus filed with Securities Exchange Board of India (SEBI), the National Highway Authorities of India ( NHAI) and Power Finance Corporation (PFC) will be offering tax free bonds of worth Rs 10000 crore and Rs 4,033.13 crore, respectively.
These Rs 14,000 crore AAA rated tax free bonds have opened up new investment avenues for the investors apart from old traditional tax saving options.
Rs 966.87 crore of total Rs 5,000 crore has already been raised through private placements by PFC.
“NHAI’s public issue of tax-free non- convertible bonds of face value of Rs 1,000 each is in the nature of debentures having tax benefits under section 10(15) (iv) (h) of the Income-Tax Act, 1961,” as stated in prospectus.
Tax free bonds give investors tax free returns for any amount invested, consequently NHAI prospectus has clarified that only the amount of interest from the actual investment amount will be tax free.
The coupon rate for these bonds are yet to be fixed. The maturity will have have two tenures 10 years and 15 years. The coupon rate of tax free bonds will be about 8.5%, according to sources.
The NHAI and PFC both have got AAA ratings from Crisil, CARE and Fitch, respectively.
PFC has filed the prospectus last week, NHAI's issue was to be filed in early December, but will take few more weeks to hit the market.