The government is giving aggrieved high-income professionals another chance to invest in tax-free bonds before they are stopped.
It has allowed state-backed National Bank for Agriculture and Rural Development and Indian Railways Finance Corporation to sell about Rs 6,000 crore of tax-free bonds and mandated a higher-than-usual allocation for retail investors.
The two bond sales will be the last such issues in this financial year and are likely to offer as much as 7.29-7.64% with 10- to 15-year maturities. The government allowed the additional fund raising on condition that a higher portion of the issue is set aside for retail investors, who can buy up to 60% of these bonds compared with 40% earlier.
In the budget presented last year, seven state-owned companies were supposed to sell Rs 40,000 crore of tax-free bonds, of which the National Highways Authority of India was allotted Rs 24,000 crore and the Indian Railway Finance Corporation was allowed Rs 6,000 crore.
