Power Finance Corporation (PFC) Tax-Free Bonds : Important Features, Issue Size, Return, Tax Exemption
Power Finance Corporation (PFC) has come out with a Rs 5,000-crore tax-free bond issue. PFC is a Navratna Government of India undertaking with the government holding 73.72% stake in it. Allotment will be made on a first-come-first-serve basis and the issue closes on January 16.
Tax Free Bonds of Face Value of Rs.1,000 Each, In The Nature Of Secured, Redeemable, Non-Convertible Debentures, Having Benefits Under Section 10(15)(Iv)(h) of The Income Tax Act, 1961
PFC bonds score well for those in the highest tax bracket. So if you invest 1 lakh in PFC bonds, and you are in the highest tax bracket, you will get an interest income of Rs 8,300 per annum for 15 years which is tax free. As against this, even if you earn a 9% interest in bank fixed deposit and you are in the highest tax bracket (30.9%) you will earn an interest of Rs 9,000 per annum but will pay a tax of Rs 2,781, so the net interest you earn is only Rs 6,219, or yield of 6.22%.
Why To Apply ?
Tax-free interest of 8.3% is the highest available after PPF, and there is no upper ceiling on investment. Though PPF offers you an interest of 8.6%, it is subject to revision and the maximum amount you can invest is only Rs 1 lakh per annum.
CLICK HERE TO CHECK MORE DETAILS FROM THE OFFICIAL WEBSITE OF PFC