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Rs 3,080-cr tax-free Railway Bonds coming

The Central Board of Direct Taxes (CBDT) has given its nod to Indian Railway Finance Corporation (IRFC) to issue tax-free “Railway Bonds” amounting to Rs 3,080 crore during 2010-11.
The Railway Bonds would have to be secured, redeemable and non-convertible and can be issued at a coupon in the range of 6-7.25 per cent per annum, depending on the size and tenor of a tranche, the CBDT has said.
The tax exemption on the interest received on the Railway Bonds will be available only to those bondholders who have registered their names and their holdings with IRFC, official sources said. The Finance Ministry has allowed IRFC to issue tax-free bonds of Rs 1,000 each in the case of public issue and Rs 1 lakh each in other cases (such as private placement to institutional investors, etc).
While the Government had allowed IRFC to raise Rs 5,000 crore through tax-free bonds in early 2009-10, the formal notification from the CBDT allowing IRFC to issue the same came towards the end of that fiscal (in February 2010).
IRFC could mobilise only Rs 1,920 crore through tax-free bonds issuance in 2009-10 and had sought a rollover from the Finance Ministry to raise the remaining amount of Rs 3,080 crore in the current fiscal.
SOURCE -  The Hindu Business line

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