Skip to main content

IRFCL Tax Free Bond - A safe option for tax free income

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

Report on Indian Railway Finance Corporation (IRFCL) tax free bond issue. According to the research firm, the company's performance has been rated excellent for 11 years in a row by the Department of Public Enterprises. The bonds issued by the company will be secured by creating a first pari passu charge on the movable assets of the company.

 

IRFCL has come out with its tranche II bond issue. The issue carries a coupon of 7.38% and 7.54% for 10 years and 15 years, respectively. Interest received on the bond is fully exempt from income tax. The pre-tax yield on the bond for the highest tax bracket investors, therefore, works out to 10.68% and 10.91% for 10 years and 15 years, respectively, higher than 8.5-9% on bank fixed deposit and other stable fixed income instruments. CARE and Icra have assigned AAA rating for the bond issue, which is the highest credit rating. IRFCL is a wholly-owned government company, which finances the railways. The company's performance has been rated excellent for 11 years in a row by the Department of Public Enterprises. The bonds issued by the company will be secured by creating a first pari passu charge on the movable assets of the company. The bonds, therefore, are a safe avenue to earn tax free income.

 

Issue details:


Government of India, acting through the Ministry of Finance, has authorised IRFCL to issue tax free, secured redeemable, non-convertible bonds of Rs 1,000 each aggregating to Rs 10,000 crore for FY13. The Central Government in exercise of powers conferred by Section 10(15)(iv)(h) of the Income Tax Act, 1961 authorises to issue during FY13, tax free, secured, redeemable, non-convertible bonds up to Rs 10,000 crore. The company vide above two notification has come out with a Rs 8884.6 crore tax free bond issue. Of Rs 10000 crore, the company has already raised Rs 1113.6 crore via private placement. It came out with the tranche 1 issue a few days back. As per media reports, it has collected ~ Rs 3000 crore.

 

Analysis


IIFCL's tax free bond comes with a coupon rate of 7.38% and 7.54% for 10 years and 15 years, respectively, for a retail investor. Interest received on the bond is fully exempt from income tax. The pre-tax yield on the bond for the highest tax bracket investors, therefore, works out to 10.68% and 10.91% for 10 years and 15 years, respectively, higher than 8.5-9% on bank fixed deposit and other stable fixed income instruments.

 

The coupon on the bond issued under the tax exempt clause is related to the prevailing government securities rates. The ceiling in the coupon rate for a AAA rated issuer is fixed at 50 basis points (bps) below the reference G-sec rate* for the retail investor and 100 bps lower for others. It may be noted that the differential rate for retail investors shall be applicable only to original allottees. In the event of sale/transfer by the original allottee of the bond, the subsequent allottee will get the rates of other investor's.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

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

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

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax PlanInvest Online
  2. HDFC TaxSaverInvest Online
  3. DSP BlackRock Tax Saver FundInvest Online
  4. Reliance Tax Saver (ELSS) FundInvest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) FundInvest Online
  7. SBI Magnum Tax Gain Scheme 1993Invest Online
  8. Sundaram Tax SaverInvest Online
  9. Edelweiss ELSS Invest Online

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

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFundsInvest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

Popular posts from this blog

JP Morgan launches Emerging Markets Opportunities Equity Offshore Fund

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 JP Morgan launches Emerging Markets Opportunities Equity Offshore Fund    The new fund offer opens for subscription on 16 th June and closes on 30 th June. JP Morgan Mutual Fund today announced the launch of its open end fund of fund called Emerging Markets Opportunities Equity Offshore Fund. The fund will invest in an aggressively managed portfolio of emerging market companies in the underlying fund - JPMorgan Funds - Emerging Markets Opportunities Fund, says a JP Morgan press release. Noriko Kuroki, Client Portfolio Manager, Global Emerging Markets Team (Singapore), JPMAM said, "Emerging markets have been out of favour for several years, as growth decelerated and earnings struggled. However, in a world of globalisation, we believe that EM will eventually re-couple with DM, leading to the long-aw...
Read more

Nifty F&O

  1. What is a straddle? A strategy using Nifty options usually before a major event or when one is uncertain of market direction. Comprises purchase of a Nifty call and put option of the same strike price. Usually strikes are purchased closer to the level of the underlying index. 2. What is better ­ buying or selling a straddle? It depends.Implied volatili ty of options, or near-term expectations of price swings in an un derlier like Nifty , usually peaks before an event and falls when the outcome plays out ­ like Infy re sults in past years. However, once the event plays out, a sharp rise or fall in Nifty could result in price of the straddle rising ­ benefiting buy ers. But, normally , those who sell or write options charge hefty premiums from buyers in the hope that fall in volatility would ensure the options end out-of-the-money, hurting buyers. 3. So, do straddle sellers end up winning most of the time? Yes. That's invariably the case when market volatility is trending on the...
Read more

L&T Long Term Infrastructure Bond 2012 Tranche 2 Application Forms

Application form for Tax Saving Long Term Infrastructure Bond     L&T Long Term Infra Bond Application form     Submit filled up application     Collection canter near you     --------------------------------------------- Invest Tax Saving Mutual Funds Online Mutual Funds Online   Download Tax Saving Mutual Fund Application Forms from all AMCs Download Tax Saving Mutual Fund Applications   ---------------------------------------------   How to apply to PFC Bonds? Apply for PFC Tax Free Bonds forms below Download PFC TAX Free Bond Application Forms Submit the filled up form to Collection canter near you How to apply to NHAI Bonds? You can download the NHAI Tax Free Bonds forms below Download NHAI Tax Free bond Application Forms Submit the filled up form to Collection canter near you        
Read more

Changing the scheme preference in NPS

The NPS allows subscribers to choose the pension fund schemes in which they would like their contributions to be invested, as well as the pension fund manager who will manage their money. Subscribers can indicate their preference by mentioning the ratio in which their contribution will be invested in equity, corporate bonds and government bonds. They can also change this preference if they wish to do so. Here's how to go about it. Active vs auto As an alternative to choosing fund schemes, the NPS offers an auto choice where the proportions are pre-decided based on the age of the subscriber. The ratios cannot be modified in the auto choice, without changing the mode to active. Corporate If the subscriber is investing in the NPS through his corporate employer, the employer should offer all the options that the subscribers can choose from to change their preference. Physical form A form, UOS-S3CS-S3, has to be filled in and submitted to the PoP-SP through which the NPS account was ope...
Read more

UTI Equity Fund Invest Online

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)   UTI Equity Fund   Invest Online UTI Equity is a large cap-oriented fund with assets under management worth Rs. 2,269 crore (as on June 30, 2013). The fund was originally launched in May 1992 as UTI Mastergain and is benchmarked against S&P BSE 100. A couple of years back the name of the fund was changed to UTI Equity Fund and many of the smaller funds of UTI were merged into this fund. Performance The fund has outperformed its benchmark as well as the equity diversified category average in the last one-, three- and five-year periods. It has repeated the same in 2013 (as on May 31). Since its inception the fund has delivered an impressive 26 per cent compounded annual growth rate which is superior to its benchmark performance in the same period. Y...
Read more
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