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  • NFO News Tax saving bonds now open for subscription

    Tax saving bonds now open for subscription

    IFAs can recommend PFC bonds to investors looking for steady income with tax advantages and safety of capital.
    Team Cafemutual Oct 14, 2011

    IFAs can recommend PFC bonds to investors looking for steady income with tax advantages and safety of capital.

    PFC Long-term Infrastructure Bonds and IFCI Long Term Infrastructure Bonds–SERIES III will be open till 4 November and 14 November respectively. Bondholders can avail the additional Rs 20,000 deduction under section 80CCF of the Income-tax Act (apart from the Rs one lakh deduction under section 80C).

    Who can Apply: Resident Indian Individuals (Minors not eligible) and HUFs in the individual name of the Karta

    Application Size: Minimum of one bond and multiples of one bond thereafter. Each bond has a face value of Rs. 5000.

    Availability: In dematerialized form or in physical form

    Bond Features

    Options for Subscription

    I

    II

    III

    IV

    Frequency of Interest Payment

    Cumulative

    Annual

    Cumulative

    Annual

    Interest Rate (% p.a.)

    8.50 % p.a. (Annual compounding)

    8.50 % p.a.

    8.75 % p.a. (Annual compounding)

    8.75% p.a.

    Tenor

    10 years

    10 years

    15 years

    15 years

    Buyback option

    Yes

    Yes

    Yes

    Yes

    PFC Buyback Dates

    At the end of 5th year from Deemed Date of Allotment

    At the end of 7th year from Deemed Date of Allotment

    IFCI Buyback Dates

    At the end of 5th and 7th years from Deemed Date of Allotment

    At the end of 7th, 10th and 12th year from Deemed date of Allotment

    Lock-in Period

    Five years from the Deemed Date of Allotment

    Min Investment & Face Value

    Rs 5000 per bond

    Investment in Multiples of

    Rs 5000 per bond

    Tax Benefit

    Avail the additional Rs 20,000 deduction under section 80CCF of the Income-tax Act (apart from the Rs one lakh deduction under section 80C)

    Nature of the Bond

    PFC Infra Bond: Secured

    IFCI Infra Bond: Unsecured

    Credit Rating

    PFC Infra Bond: Assigned “AAA/Stable” by Crisil and “AAA” with a stable outlook by ICRA

    IFCI Infra Bond: Assigned “BWR AA-” by Brickwork Ratings (India), “CARE A+” by CARE and “LA” by ICRA

    Issuance & Trading

    Bonds shall be issued both in dematerialized form and physical form. However, trading allowed only in dematerialized mode after the expiry of lock-in period of 5 years

     

    Who can sell the product?

    ·       Registered stock-brokers with any Stock Exchange along with their respective sub-broker

     

    ·         Banks and brokers selected by the issuing company

    How can an IFA get registered to sell the product?

    ·        If an IFA wishes to sell the product he needs to sign the sub-broker agreement with a stock-broker.

    Tentative Brokerage structure:

    No of Applications

    Brokerage (%)

    < 1000

    1%

    1000 - 5000

    1.10%

    5000 - 10000

    1.20%

    10000 - 20000

    1.30%

    > 20000

    1.50%

    Note: Base brokerage is 1%

    Following is an early bird scheme for brokers offered by one of the bond issuing companies:

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    Have a query or a doubt?
    Need a clarification or more information on an issue?
    Cafemutual welcomes all mutual fund and insurance related questions. So write in to us at newsdesk@cafemutual.com

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