Skip to main content

Tax Free IRFC bonds

 
The ~5,000 crore Indian Railways Finance Corporation (IRFC) bond, scheduled to open on January 27, has sprung a surprise in its prospectus.

What has stumped investors is the new clause (a first in such issues) that the additional coupon for retail investors (8.15 per cent and 8.3 per cent) will be only for primary retail subscribers. Bonds purchased offline or online will carry an eight per cent and 8.10 per cent coupon rate for 10 and 15-year terms, respectively, for all categories of investors.

In other words, if a retail investor sells the bond in the secondary market, the buyer will earn lower returns than the couple rate. In effect, the arbitrage opportunity between retail and HNIs/QIBs will get cancelled if the bond is sold in the exchanges, thereby creating an in-built discount for a retail investor who wants to exit in the interim.

This would be quite a blow to HNIs who use such opportunities to garner good returns through dummy applicants from these instruments. In fact, retail investors often act as dummy applicants for these issues. When these issues get listed, they sell to HNIs or institutional investors.

Market participants say there is a thriving market for dummy applicants in cities like Ahmedabad, Rajkot and Jaipur. In the recent NHAI issue, dummy investors were paid ~2,000 per application for name renting.

But if they want to follow the same strategy in this issue, they are unlikely to get the arbitrage benefit. From a retail investor's point of view, they should enter only if they are ready to stay invested for the long term. If they want to exit in the interim, they are likely to get a lower realisation of at least 15-20 basis points. Market opinion, however, is divided on IRFC's move. While some feel this will ensure that only genuine retail investors subscribe to these bonds, many others say the institution is tampering with a free market.

IRFC could have opted for a single pricing mechanism like NHAI and PFC. This would not have confused buyers. With this new clause, they as issuers are trying to control the rate of returns investors can earn in the secondary market. NHAI and PFC offered 8.2 per cent and 8.3 per cent, respectively, for all sets of investors.

The investment banker cites the example of initial public offers or follow-on offers by the government, where the retail investor gets 5-10 per cent discount. However, there are no conditions of a lower rate if sold on listing.

Thirty per cent of the IRFC issue size has been reserved for retail investors, 25 per cent for high networth individuals and 45 per cent for institutional buyers.

Offers more to them, but introduces clause that buyers in the secondary market will earn lower returns
 
How to apply to IRFC Bonds?

Apply for IRFC Tax Free Bonds forms below

Download IRFC Tax Free Bond Application Forms

Submit the filled up form to Collection canter near you

---------------------------------------------

Application form for Tax Saving Infrastructure Bond and more information

Current open Infra Bond Application form

 

Submit filled up application    Collection canter near you

 

 

 

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

 

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

 

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

 

These Application Forms can be used for buying regular mutual funds also

Popular posts from this blog

ICICI Pru Mutual Fund Dividend

ICICI Prudential Mutual Fund has announced dividend under the following schemes: Scheme Dividend ( Rs /unit) ICICI Pru Capital Protection Oriented Ser V Plan B-D 0.03611325 ICICI Pru Capital Protection Oriented Ser V Plan B Direct-D 0.03611325 ICICI Pru Balanced Advantage Direct-DM 0.06 The record date has been fixed as February 08, 2017. ------------------------------ ------ Invest Rs 1,50,000 and Save Tax upto Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds Top 4 Tax Saver Mutual Funds for 2017 - 2018 Best 4 ELSS Mutual Funds to invest in India for 2017 1. DSP BlackRock Tax Saver Fund 2. Invesco India Tax Plan 3. Tata India Tax Savings Fund 4. BNP Paribas Long Term Equity Fund Invest in Best Performing 2017 Tax Saver Mutual Funds Online Invest Best Tax Saver Mutual Funds Online Download Top Tax Saver Mutual Funds  Application Forms For further information contact  SaveTaxGetRich on 94 8300 8300 ------------------------------ ------ Leave y...

What is Financial Freedom?

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)     There were many things common between our Freedom fighters. All had the Single vision (Free India), common goal (independence) and had a disciplined and focused approach. They were ready to do anything and everything and had made so many sacrifices to see India free . But the road to freedom was not easy .They had faced lot many hardships, went to jail so many times and even confronted physical and mental torture from the British. There was one more thing which proved to be an advantage to our fighters that most of them were professional lawyers. The knowledge of legal issues and its impact on our country at large has helped them counter various bills and proposed new laws by the then government. It is due to their continuous effort that we are able to achieve the goal of Independent Indi...

Hidden Bank Fees

  What Banks Hide From Customers Imagine after a peaceful and exciting holiday you receive your bank statement with steep charges. You then rush to your bank and start confronting staff members and to your dismay, you come to know that the high end debit card was charged very heavily. Wouldn't this cause damage to your finances? So remember, the world outside is full of deceptive and double cheating people. Unethical practices are always used by company sales person in order to meet the target. Credit card companies, mutual funds and bank institutions always play dirty tricks to lure customers and the practices are rampant. So here's how you should be careful while dealing with your banks: High End Debit Card Charges While opening an account with a bank you opt for a debit card with minimal charges. But later on when you upgrade your card and opt for high end debit card the annual charge rise by a good amount. Though such a card has slew of features but it all comes at a high ...

Partial withdrawal from PPF

  Public Provident Fund (PPF) account has a lock in period   If you opened a PPF account to meet your retirement needs,, think twice about withdrawing from this fund before retirement. But provided it's an emergency here are the rules. Public Provident Fund (PPF) account has a lock in period before which you cannot withdraw your money.   The partial withdrawal is allowed after the completion of 6 financial years . This means that you will be allowed a partial withdrawal from 1 April 2017. The maximum partial withdrawal allowed is the least of the following: 50 percent of the account balance at the end of fourth financial year, 31 March 15 50 percent of the account balance of the end of previous financial year, 31 March 17.   There's a loan option available on your PPF account between the fourth and the sixth financial year. You can obtain a loan of up to 25 per cent of the balance in your account. However, this will attract interest of 2 percent more than the prevailing ...

Updating a minor PAN card upon becoming adults

  Updating a minor's PAN card once they become adults A PAN card issued in the name of a minor does not contain the minor's photograph or signature, and therefore, cannot be used as a valid proof of identity. Once a minor PAN card holder turns 18, the relevant changes must be made in the PAN records. A new card is then issued bearing a photograph and signature. Application The applicant is required to fill up the "Request for new PAN card andor changes or correction in PAN data" form. The form can be filled up online by accessing NSDL's Tax Information Network website and clicking on the online PAN application tab. Information The applicant must mention the existing PAN number in the application and check the `photo mismatch' and `signature mismatch' boxes, and submit the online form. The form must also be printed out, signed by the applicant, and submitted along with two photographs. Documents Identity and address proof in the form of a copy of the app...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now