NHAI tax free bonds are offering coupon rate of 6 percent compounded annually. The issue is open on tap basis and closes on March 31, 2014 at the close of the banking hours or on achieving of ceiling limit of Rs 4000 crore without any further notice by NHAI.
These bonds provide tax advantage under Section 54EC of Income Tax Act for Long Term Capital Gains (LTCG).
As per provisions of Income Tax Act, 1961, any long term capital gains arising from transfer of any capital asset would be exempt from tax under section 54EC of the Act if:
· The entire capital gain realized is invested within 6 months of the date of transfer in eligible bonds
· Such investment is held for 3 years
· To avail of capital gain exemption, the bonds so acquired cannot be transferred or converted into money or any loan or advance can be taken on security of such bond within 3 years from date of acquisition else, the benefit would be withdrawn
If the amount invested in bonds is less than the capital gains realized, only proportionate capital gains would be exempt from tax.
Who can apply: Resident individuals, HUFs, partnership firms, companies and body corporates, banks, financial institutions, regional rural banks, co-operative banks, insurance, provident funds, superannuation funds, gratuity funds, mutual funds, foreign institutional investors, trust which are authorized to invest in the bonds, NRIs investing out of NRO a/x on non-repairable basis and other eligible categories.
Application size: The minimum application size is Rs 10,000 per bond. Investors can buy up to 500 bondsand the maximum application size per application should not exceed Rs 50 lakh.
Coupon Rate and Maturity: NHAI bond will provide 6 percent interest compounded annually. It has a lock-in period of three years.
Who can sell the product: Registered stockbrokers with any stock exchange along with their respective sub-brokers, banks and intermediaries selected by the issuing company.
How can an IFA get registered to sell the product: An IFA has to sign the sub-broker agreement with a stock broker to be eligible to sell the bonds.
Tentative brokerage structure: A minimum brokerage of 0.05% per application is offered upfront.
Trustee: Syndicate Bank
Registrars: Beetal Financial & Computer Services Private Limited.
Listing: Bonds instruments will not be listed.
Credit Ratings: CRISIL, India Ratings and Research have assigned a rating of “AAA/Stable” (triple A with stable outlook)
Transferability: The bonds are non-transferable, non-negotiable and cannot be offered as a security and credited to NHAI’s collection account.
Taxation: NHAI provides tax relaxation on long term capital gain investments under Section 54 EC of Income Tax Act.
Withdrawal of applications: Once the application is credited the withdrawal is not permitted.
