Indian Railway Finance Corporation (IRFC) Tax Free Bonds

Indian Railway Finance Corporation (IRFC), the financing arm of Indian Railways, is proposing to issue tax free, secured, redeemable, non-convertible bonds of face value of Rs 1,000 each in the nature of debentures, having benefits under Section 10(15)(iv)(h) of the Income Tax Act, 1961, as amended (bonds) aggregating to Rs 3,000 crore with an option to retain oversubscription of upto the shelf limit of Rs 6,300 crore.

                                                     The application for subscription of bonds should be for a minimum of 10 bonds and in multiples of 5 bonds thereafter. The issue will open for subscription on January 27, 2012, and close on February 10, 2012, or earlier (subject to the issue being open for a minimum period of 3 days), or extension by such period, upto a period of 30 days from the date of opening of the issue, as may be decided by the board of directors or by a duly constituted committee of the company.

The bonds shall carry a coupon rate of 8.00% p.a for 10 years (ISEC Comment: Series I) and 8.10% p.a for 15 years (ISEC Comment: Series II). An additional coupon rate of 0.15% p.a. and 0.20% p.a. on series 1 and series 2 respectively shall be available to Resident Indian Individuals, Hindu Undivided Families through the Karta and Non Resident Indians on repatriation as well as non-repatriation basis, applying for an amount aggregating upto and including Rs 5 lakh across all series in the tranche (available only to the original allottees). The bonds are proposed to be listed on NSE and BSE.  

The bonds have been rated 'CRISIL AAA/Stable' by CRISIL, '[ICRA] AAA' by ICRA and 'CARE AAA' by CARE, indicating highest degree of safety for timely servicing of financial obligations.

REC Long Term Infrastructure bonds are tax rebate u/s 80 CCF

Power Finance Corporation Tax Free Bond

Issue Highlights :

• Tax Free Bonds in the nature of secured, redeemable, non convertible debentures
• Rated “AAA” by CRISIL & ICRA respectively
• Interest Income on the Bonds is tax-free in nature
• Option of Issuing either in Demat form or physical form
• Who can Apply- Resident Individuals, HUFs, QIBs, Corporates, NRIs (both NRE & NRO)
• To be listed on BSE

Here are some of the other terms of this issue.

Options	Tranche 1 Series I	Tranche 1 Series II
Face Value	Rs. 1,000	Rs. 1,000
Term	10 years	15 years
Interest payment	Annual	Annual
Coupon Rate	8.20%	8.30%

NHAI Tax free Bond

NHAI Tax Free Bond Details

S.No.	Particulars			Rate/Date
1	Rate of Interest for 10 Years Tenure			8.2% p.a. (payable annually)
2	Rate of Interest for 15 Years Tenure			8.3 % p.a. (payable annually)
3	Date of Opening of Issue			28th December 2011
4	Date of Closing of Issue			11th January 2012
5	Interest on Application Money on successful allotment			(Coupon Rate of the respective Tranche)
6	Interest on Refund			4% p.a.
7	Base Issue Size			` 5000 crore
8	Minimum Application Size			` 50000 (50 Bonds)
Particulars		Retail **	HNI		other
Size in %		30% of the base issue size	30% of the base issue size		40% of the base issue size
Size in Amount		` 1500 Crore	` 1500 Crore		` 2000 Crore

**    The allotment shall be done on a proportionate basis only for Retail category and not on first come first serve basis (FCFS). Retail application is for an amount of Rs. 5 Lakh or less.

Allotment for the other categories will be on First Come First Serve Basis

NHAI Tax Free Bond - Investment Rationale

1. Timing appropriate:10 Year G sec at 8.30% is close to the last 5-year high - right

time to start building on a long-term bond portfolio as we cannot time the entry

2. Tax-free best option: Long bonds are of 3 types – zero-coupon or interest-bearing or

tax-free – highest post tax yields & mark to market realizable on tax-free- the best option

3. Better Liquidity: Listed on NSE and BSE. With the issue size expected upto Rs. 10,000

crs the floating stock will be relatively better

4. Credit quality: AAA government PSU (autonomous authority of the GoI under the

Ministry of Road Transport and Highways )

5. Tax free interest income not affected by potential tax regulation changes

6. Lienable / Pledgeable

Section 80CCF Explained: Meaning, Benefits, Eligibility & FAQs

Section 80CCF of Income Tax Act (India): Meaning, Benefits, and FAQs (Complete Guide)

If you’re exploring tax-saving options in India, you might have come across Section 80CCF. Although this provision is no longer active, it played a significant role in offering additional tax deductions beyond Section 80C.

What is Section 80CCF?

Section 80CCF of the Income Tax Act, 1961 allowed taxpayers to claim a deduction of up to ₹20,000 for investments in long-term infrastructure bonds.

Introduced in: Union Budget 2010

Applicable to: Individuals and Hindu Undivided Families (HUFs)

Objective: To boost infrastructure funding in India

Key Features of Section 80CCF

• Additional Tax Deduction
• Allowed deduction of up to ₹20,000
• This was over and above ₹1.5 lakh limit under Section 80C

Eligible Investments

• Only notified infrastructure bonds qualified
• Issued by institutions such as:
• IDFC
• L&T Infrastructure Finance
• IFCI

Lock-in Period

• Minimum lock-in of 5 years
• Taxation of Interest
• Interest earned was fully taxable

Is Section 80CCF Still Available?

No. Section 80CCF has been discontinued.

It was available only for:

• FY 2010–11
• FY 2011–12
• No new investments qualify for deduction under this section today.

Example of Tax Benefit (When Active)

Let’s understand how Section 80CCF worked:

Total Income = ₹8,00,000

Investment under 80C = ₹1,50,000

Investment under 80CCF = ₹20,000

Taxable Income = ₹8,00,000 – ₹1,70,000 = ₹6,30,000

Why Was Section 80CCF Introduced?

The Government introduced this section to:

• Encourage long-term retail investments
• Generate funds for infrastructure projects like roads, highways, and power
• Provide extra tax-saving opportunities to taxpayers
• Alternatives to Section 80CCF (Current Options)

Since 80CCF is no longer applicable, here are modern tax-saving alternatives:

Section 80C (Up to ₹1.5 lakh)

• PPF (Public Provident Fund)
• ELSS (Equity Linked Saving Scheme)
• Life Insurance Premium

Section 80CCD(1B)

• Additional ₹50,000 deduction for NPS (National Pension System)

Section 80D

• Deduction on health insurance premiums

FAQs on Section 80CCF

1. What is the maximum deduction under Section 80CCF?

Up to ₹20,000 (when it was active).

2. Can I claim 80CCF deduction today?

No, it has been discontinued and is not applicable now.

3. Was 80CCF included in Section 80C limit?

No, it was separate and additional.

4. Who could invest under 80CCF?

Individuals, Hindu Undivided Families (HUFs)

5. What was the lock-in period?

Minimum 5 years.

6. Was the interest tax-free?

No, interest was taxable as per income slab.

7. Were NRIs eligible?

Yes, NRIs could invest during its active period.

8. What type of bonds qualified?

Only government-notified infrastructure bonds.

9. Why was Section 80CCF removed?

To simplify tax laws and shift focus to other schemes like NPS.

10. Should I invest in infrastructure bonds today?

You can invest for returns, but no tax benefit under 80CCF is available.

Final Thoughts

Section 80CCF was a temporary but impactful tax-saving provision that allowed taxpayers to claim additional deductions beyond Section 80C. While it is no longer in force, understanding it helps in grasping the evolution of India’s tax-saving instruments.