HIGHLIGHTS OF TAX BENEFITS
In exercise of the powers conferred by item (h) of sub-clause (iv) of clause (15) of Section 10 of the Income Tax Act, 1961 (43 of 1961) the Central Government has authorised Power Finance Corporation Ltd. to issue during the FY 2011-12, Tax Free Secured Redeemable Non-Convertible Bonds of face value of Rs. 1,000 each aggregating upto Rs 5,000 crores.
The income by way of interest on these Bonds is fully exempt from Income Tax and shall not form part of Total Income as per provisions under section 10 (15) (iv) (h) of IT Act.
There will be no deduction of tax at source from the interest, which accrues to the bondholders on these bonds irrespective of the amount of the interest or the status of the investors.
Wealth Tax is not levied on investment in Bonds under section 2(ea) of the Wealth-tax Act, 1957.
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A Nav-Ratna Government of India undertaking (73.72% equity shareholding held by GOI)
Classified as Infrastructure Finance Company in July 2010 by RBI & a Public Financial Institution u/s 4 A of the Companies Act „ 1956
Provides large range of financial products and services such as Project Term Loan, Lease Financing, Direct Discounting of Bills, Short Term Loan, Consultancy Services etc. for various power projects in Generation, Transmission, Distribution sector as well as for Renovation & Modernisation of existing power projects.
Promoted PTC (India) Ltd. as joint venture alongwith NTPC and PGCIL.
Low gross NPA ratio of 0.22% in FY 11
SALIENT FEATURES OF THE PROPOSED TAX FREE BONDS
Tax benefits u/s 10 (15) (iv) (h) of the Income Tax Act, 1961 – interest on these Bonds shall not form part of Total Income.
Credit Ratings of “CRISIL AAA/Stable” by CRISIL, “ICRA AAA” by ICRA indicating Highest Degree of Safety in terms of timely servicing of financial obligations.
Bonds to be allotted on first-cum-first serve basis up to the limit reserved for each category of investors Bonds can be held in physical or in dematerialized form, at the option of bondholders
Bonds are proposed to be listed on the BSE