What are Infrastructure Bonds? The government of India awards infrastructure status to certain projects that are of national importance. Infrastructure projects are usually undertaken by PSU entities such as IDFC, PFC, etc. with L & T being the exception. Capital for these projects is raised through infra bonds. The minimum…
The RBI first issued 8% bonds in 2003. As the name suggests, they pay 8% interest per annum and the interest income is taxable. Investors need to invest a minimum of Rs. 1,000 there is no ceiling or limit on the investment amount. Normally, the bonds have a maturity of six years.…
54 EC Bonds are popularly known for the tax benefits they provide under Section 54 EC of the Income Tax Act. These bonds are typically issued by the Power Finance Corp (PFC), Rural Electrification Company (REC), and the National Highways Authority of India (NHAI).
Government-backed entities such as, NHAI, REC, PFC, etc. issue tax-free bonds to raise capital. The capital is meant for long-term projects and these bonds have tenors of 10, 15 or 20 years. The interest earned from these bonds is exempt from taxation. Capital gains from the sale of bonds are taxable.