Monday, March 11, 2013

NHB Tax Free Bonds 2012-2013

1 comment
National Housing Bank, a Government of India undertaking, has come out with Rs 3750 crore public issue of tax free secured redeemable non-convertible bonds. The company operates as a principal agency to promote housing finance institutions both at local and regional levels and to provide financial and other support to such institutions. It is wholly owned by the Reserve Bank of India. For those individuals who are in the highest tax bracket, this is a good source of tax free secured interest income. 

Opening and Closing dates:

The issue shall open on 11 March, 2013 and shall close on 15 March, 2013.

Face Value:

The face value is Rs 10000 per bond and the minimum application for subscription in retail segment is Rs 10,000 with maximum at Rs 10 Lakhs in increment of Rs 10000.

Available options:

Interest Rate %
       HNI / Corporate
10 yr

Those investing up-to Rs 10 lakhs are retail investors and above that are High Net-worth Investors (HNIs) for the purpose of this issue. These bonds carry a step-down clause - the coupon gets reduced by 50 basis points for retail investors once the bonds get listed or the ownership of bonds changes hands. Interest would be paid annually for all categories.

CRISIL has rated AAA and CARE AAA to the bond issue indicating high grade safe investment. These bonds would be listed and tradable on NSE and BSE. No tax would be deducted at source on income and the allotments would be on first come first serve basis.

The issue can be subscribed in DMAT as well as physical form.

National Highways Authority of India, Housing and Urban Development Corp, National Housing Bank, Indian Railways Finance Corp, IIFCL, Ennore Port, Jawaharlal Nehru Port and Dredging Corporation are among companies permitted by the government to sell tax-free bonds under Section 10 (15).
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1 comment:

  1. thanks for this post. I want to know if NRIs have the option to invest in this bond from NHB and if they can avail the associated tax benefits from this. Also how to these bonds measure up in comparison to other such bonds that have been introduced by govt of india over the last year. is there any upper limit on how much one can invest in this scheme?

    nri income tax rules in india