Govt. authorises IRFC to issue Rs.5,000 crore tax-free bonds

The Union Government has authorised the Indian Railway Finance Corporation (IRFC) to issue tax-free bonds with a total value of Rs 5000 crore through public issue or otherwise by March 31 this year.

An official press release said the secured, redeemable, non-convertible bonds would carry an interest rate in the range of 6.50 per cent to 7.25 per cent per annum.

The interest income on investment in these bonds will be exempt from income tax under item (h) of sub-clause (iv) of clause (15) of section 10 of the Income-tax Act, 1961 in the hand of the person in whose name such bonds are registered, it said.

The Government has also approved notification of 10 years zero-coupon Bhavishya Nirman Bonds of National Bank of Agriculture and Rural Development (NABARD) to be issued by March 31, 2010 for the purpose of sub-section 48 of section 2 of the Income Tax Act, 1961.

The number of bonds approved for issue are 95,20,000 with maturity value of Rs.20,000 each having life period of 10 years. The income on such bonds will be taxed only on maturity as capital gain, the release added.

NNN