PTC India Financial Services Ltd. (PFS) has launched infrastructure bonds in the name as PFS Long Term Infrastructure Bond – Series 2,  under section 80CCF of face value of Rs. 5000/- each to remain open till February 29, 2012 for subscription.  The company has set up as a special purpose investment vehicle for providing total financing solutions to the energy value chain which inter-alia includes investing in equity and/or extending debt to power projects, which are working in generation, transmission, distribution, equipment manufacturers, fuel sources and EPC contractors and carbon credit finance.

TAX BENEFITS UNDER THE INCOME TAX ACT, 1961

Under the current tax laws (existing as well as proposed) the following tax benefits, inter alia, will be available to the Bond Holder as mentioned below. The benefits are given as per the prevailing tax laws and may vary from time to time in accordance with amendments to the law or enactments thereto. The Bond Holder is advised to consider in his own case the tax implications in respect of subscription to the Bond after consulting his tax advisor as alternate views are possible. PFS or the Trustees shall not be liable to the Bond Holder in any manner for placing reliance upon the contents of this statement of tax benefits.

A. INCOME TAX:

Tax Benefits to the Resident Bond Holders

According to section 80CCF an amount not exceeding rupees twenty thousand invested in long term infrastructure Bonds shall be allowed to be deducted from the total income of an Individual or Hindu Undivided Family. This deduction shall be available over and above the aggregate limit of ~ One Lakh as provided under sections 80C, 80CCC and 80CCD read with section 80CCE.

Section 80CCF reads as “In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted, the whole of the amount, to the extent such amount does not exceed twenty thousand rupees, paid or deposited, during the previous year relevant to the assessment year beginning on the 1st day of April, 2011, as subscription to long­term infrastructure Bonds as may, for the purposes of this section, be notified by the Central Government”

Taxability of Interest

Taxability of interest on Bonds would depend upon the method of accounting adopted by the resident Bondholder as mentioned in the provisions of the IT Act.

Withholding Tax

No income tax is deductible at source on interest on Bonds as per the provisions of section 193 of the I.T. Act in respect of the following:

a)      In case the payment of interest on Bonds to resident individual Bond Holder by company by an account payee cheque and such Bonds being listed on a recognized stock exchange in India, provided the amount of interest or the aggregate of the amounts of such interest paid or likely to be paid during the financial year does not exceed ~2,500;

b)         When the Assessing Officer issues a certificate on an application by a Bond Holder on satisfaction that the total income of the Bond Holder justifies nil/lower deduction of tax at source as per the provisions of Section 197(1) of the I.T. Act;

c) When the resident Bond Holder (not being a company or a firm or a senior citizen) submits a declaration to the payer in the prescribed Form 15G verified in the prescribed manner to the effect that the tax on his estimated total income of the financial year in which such income is to be included in computing his total income will be ‘nil’ as per the provisions of Section 197A (1A) of the I.T Act. Under Section 197A (1B) of the I.T Act, Form 15G cannot be submitted nor considered for exemption from deduction of tax at source if the aggregate of income of the nature referred to in the said section, viz. dividend, interest, etc as prescribed therein, credited or paid or likely to be credited or paid during the financial year in which such income is to be included exceeds the maximum amount which is not chargeable to tax. To illustrate, the maximum amount of income not chargeable to tax in case of individuals (other than women assesses and senior citizens) and HUFs is ~1,80,000/-, in case of women assesses is ~190,000/- , in case of senior citizen is ~2,50,000/- and in case of super senior citizens is ~5,00,000/- for financial year 2011-12. Senior citizens, who are 60 or more years of age at any time during the financial year, enjoy the special privilege to submit a self declaration to the payer in the prescribed Form 15H for non-deduction of tax at source in accordance with the provisions of section 197A (1C) of the I.T. Act even if the aggregate income credited or paid or likely to be credited or paid exceed the maximum amount not chargeable to tax i.e. ~2,50,000/- in case of senior citizens and ~5,00,000/- in case of super senior citizens for FY 2011-12, provided tax on his estimated total income of the financial year in which such income is to be included in computing his total income will be nil.

d) On any securities issued by a company in a dematerialized form listed on recognized stock exchange in India. (w.e.f. 1.06.2008).

In all other situations, tax would be deducted at source as per prevailing provisions of the I.T. Act;

Transfer before maturity: Under section 2 (29A) of the I.T. Act, read with section 2 (42A) of the I.T. Act, a listed Bond is treated as a long term capital asset if the same is held for more than 12 months immediately preceding the date of its transfer.

Under section 112 of the I.T. Act, capital gains arising on the transfer of long term capital assets being listed securities are subject to tax at the rate of 10% of capital gains calculated without indexation of the cost of acquisition. The capital gains will be computed by deducting expenditure incurred in connection with such transfer and cost of acquisition of the Bonds from the sale consideration.

In case of an individual or HUF, being a resident, where the total income as reduced by the long term capital gains is below the maximum amount not chargeable to tax, which for the FY 2011-12 is Rs. 1,80,000 in case of all individuals, Rs. 1,90,000/- in case of women, Rs. 2,50,000/- in case of senior citizens and Rs. 5,00,000/- in case of super senior citizens, the long term capital gains shall be reduced by the amount by which the total income as so reduced falls short of the maximum amount which is not chargeable to income-tax and the tax on the balance of such long-term capital gains shall be computed at the rate of ten per cent in accordance with and the proviso to sub-section (1) of section 112 of the I.T. Act read with CBDT Circular 721 dated September 13, 1995.

A 2% education cess and 1% secondary and higher education cess on the total income tax (including surcharge) is payable by all categories of tax payers as per the current tax laws.

Short-term capital gains on the transfer of listed Bonds, where Bonds are held for a period of not more than 12 months, would be taxed at the normal rates of tax in accordance with and subject to the provision of the I.T. Act. The provisions related to minimum amount not chargeable to tax, surcharge and education cess as described above would also apply to such short-term capital gains.

In case the Bonds are held as stock in trade, the income on transfer of Bonds would be taxed as business income or loss in accordance with and subject to the provisions of the IT Act.

B.  WEALTH TAX Wealth-tax is not levied on investment in Bonds under section 2(ea) of the Wealth-tax Act, 1957.

C.  GIFT TAX

Gift-tax is not levied on gift of Bonds in the hands of the donor as well as the donee as the provisions of the Gift-tax Act, 1958 have ceased to apply in respect of gifts made on or after 1st October, 1998.

SUMMARY TERMS AND CONDITIONS

Issuer

PTC India Financial Services Ltd. (PFS) (the Issuer)

Issue Type

Private Placement Basis

Offering

1,00,000 Secured, Redeemable, Non-Convertible Long Term Infrastructure Bonds of Series 2 of Rs. 5,000/- each aggregating to Rs. 50 Crore (Rupee Fifty Crore only) with a green-shoe option to retain *over-subscription for issuance of additional Infrastructure Bonds Series 2. The Bonds shall be issued at par on the terms contained in the relevant tranche prospectus to be issued in respect of each tranche.

*(which does not exceed 25% of the incremental infrastructure investment made by the Company in Fiscal 2011).

Issue Open Date

30 December, 2011

Issue Close Date

29 February, 2012

Deemed Date of Allotment

16 March, 2012

Instrument

Secured, Redeemable, Non-Convertible Long Term Infrastructure Bonds Series 2 with benefits under section 80CCF of the Income Tax, 1961

Rating

BWR AA (Stable outlook) by Brickwork Ratings India Pvt Ltd, CARE A+ by Credit Analysis & Research Ltd & ICRA A+ (Stable outlook) by ICRA Limited

Eligible Investors

Resident Indian Individual (Major) and HUF through Karta of the HUF

Issue Price

 Rs.5,000/-  per Bond

Face Value

Rs.5,000/- each

Minimum Size

1 Bond, further in multiples of 1

Listing

Proposed on the Wholesale Debt Market (WDM) Segment of National Stock Exchange of India Limited (NSE)

Trading

Demat mode only following expiry of Lock-in Period of 5 years

Issuance

Demat and Physical form

Registrar

Karvy Computershare Private Limited

Cheque in Favour of

PFS Infra Bond Account

Available Options:

Options

I

II

III

IV

Frequency of Interest Payment

Annual

Cumulative Option

Annual

Cumulative Option

Face Value (`)

5,000/-

5,000/-

5,000/-

5,000/-

Minimum Application

1 Bond

1 Bond

1 Bond

1 Bond

In Multiples of

5,000/-

5,000/-

5,000/

5,000/-

Issue Price (per Bond)

At par

At par

At par

At par

Terms of Payment

Full amount with application

Full amount with application

Full amount with application

Full amount with application

Tenor

10 (Ten) years

10 (Ten) years

15 (Fifteen) years

15 (Fifteen) years

Coupon (% p.a.)

8.93% p.a. (Payable annually)

8.93% p.a. (Annual compounding)

9.15% p.a.

(Payable annually)

9.15% p.a. (Annual compounding)

Coupon Payment Date

March 15, every year

At the time of maturity

March 15, every year

At the time of maturity

Maturity Date

15-Mar-22

15-Mar-22

15-Mar-27

15-Mar-27

Buyback Option

Every year after the end of 5 years and one day

Every year after the end of 5 years and one day

Every year after the end of 7 years and one day

Every year after the end of 7 years and one day

Buyback Dates

March 16 of 2017 to 2021

March 16 of 2017 to 2021

March 16 of 2019 to 2026

March 16 of 2019 to 2026

Buyback Intimation Period

1 Jan to 31 Jan of year 2017 to year 2021

1 Jan to 31 Jan of year 2017 to year 2021

1 Jan to 31 Jan of year 2019 to year 2026

1 Jan to 31 Jan of year 2019 to year 2026

Redemption amount (per Bond)

5,000

11,977

5,000

18,592

Redemption amount in case buy back option is exercised: (in Rs.)

At the end of Year 5

5,000

7,731

NA

NA

Year 6

5,000

8,438

NA

NA

Year 7

5,000

9,210

5,000

9,229

Year 8

5,000

10,053

5,000

10,073

Year 9

5,000

10,973

5,000

10,995

Year 10

5,000

11,977

5,000

12,001

Year 11

NA

NA

5,000

13,099

Year 12

NA

NA

5,000

14,297

Year 13

NA

NA

5,000

15,605

Year 14

NA

NA

5,000

17,033

Year 15

NA

NA

5,000

18,592

Lock-in period

5 years from the deemed date of allotment

Interest on Application Money shall be paid at the respective coupon from the date of realization of subscription amount to the date immediately preceding the deemed date of allotment along with first annual interest payment in Option I & III and at the time of redemption in Option II & IV

More Under Income Tax

Posted Under

Category : Income Tax (27255)
Type : Articles (16743)

19 responses to “PFS Long Term Infrastructure Bond: Tax Benefits and issue details”

  1. SANJAY CHOWDHURY says:

    I have invested in PFS long term infrastructure to get benefit under 80ccf for F.Y. 2011 -12 . I have not received the bond certificate till date. Rs 20,000/- has been debited to my saving bank account -Standard Chartered Bank on 16th of March, 2012 . Please arrange to send me a duplicate certificate.Please guide me what i can do to get the bond certificate.
    Thanking You,
    Sanjay Chowdhury
    Email: schowdhury63@yahoo.co.in
    Mobile:9717040799

  2. SANJAY CHOWDHURY says:

    I have invested in PFS long term infrastructure to get benefit under 80ccf for F.Y. 2011 -12 . I have not received the bond certificate to till date. Rs 20,000/- has been debited to my saving bank account -Standard Chartered Bank on 16th of March, 2012 . Please arrange to send me a duplicate certificate.Please guide me what i can do to get the bond certificate.
    Thanking You,
    Sanjay Chowdhury
    schowdhury63@yahoo.co.in
    9717040799

  3. Dharmendra n Damania says:

    I have. Bond of 20000 &I like to buy back my bond. PL. Guide. How to do?My folio no.PTB0301692. & I have purchase on 7/5/2012.

  4. Jaykumar H Shasane says:

    My name is Jaykumar H Shasane. I have deposited Rs.20000/_ in tax saving infrastructure bonds for March 2011.So far I have not received Bond certificate.Redemption period is over still I have not received maturity amount.My PAN no .is ANVPS1799Q.

  5. Sher Singh Chauhan says:

    Dear Sir,
    have bought the PFC long term bond, till date I have not received the bod in physical form as well as the redemption of the bond is also due. kindly advise me the process . Also I want to change my address in the bond kindly advise.
    Rgds,
    SS Chauhan.

  6. kamalkumar jain says:

    I have purcahes the PTC I Finance bond on 07/05/2012/
    Reg Folio no PTB0112164
    Certificate no -112164
    ISIN INE 560K07094

    Requested to suggest to buy back producer

  7. I have invested in PTC taxsaving bond in 2012, Now I need to withdraw/redeem, Request your guidance to proceed for redemption

  8. MRITYUNJOY SAHA/ANIMESH SAHA says:

    I have invested in PFS long term infrastructure bond series 2 to get benefit under 80ccf for F.Y. 2011 -12 on 29th feb. 2012. I have not received the bond certificate to till date, I have xerox copy of application form and xerox of cheque. .Please guide me what i can do for the same. Thanking You.
    app. no.4640034,
    chq no.242651

  9. VASUL BADIYANI says:

    I have invested in PTC taxsaving bond in 2012, Now I need to withdraw/redeem, Request your guidance to proceed for redemption

  10. Ashok Kumar agrawal says:

    Pl send the form for buy back

  11. Kaushal Kishore Khandelwal says:

    Please send the Buy Back form

  12. mahaveer prasad modi says:

    plz send a infra bond buy back form

  13. Radhakrishnan K K says:

    I have invested Rs. 20000 inPTC Infra Bonds in 2012. I have not received the bonds.
    Please send duplicate bond application details. radhalic@gmail.com

  14. Adhar Kumar says:

    Sir, I have invested Rs 20000 in PFC infra Bonds for the financial year 2011-12. Four years have since elapsed I have not received the bond certificate. Please advise me the fate.I do have the acknowledgement slip. Thanks and regards, Adhar Kumar, PAN AFSPK 2881C
    An early response will be appreciated.

  15. Mahesh Kumar says:

    I have invested in PFS long term infrastructure bond series 2 to get benefit under 80ccf for F.Y. 2011 -12 on 20th March 2012. I have not received the bond certificate to till date, I have acknowledgment slip of payment.Please guide me what i can do for the same. Thanking You.

    regards

    Mahesh Kumar
    M:9414377865

  16. Shailesh Ranjan says:

    Hi, I have invested in PFS long term infrastructure bond to get benefit under the section in this FY 2012 -13. Now the problem is that i have not received the bond certificate to produce to take the required benefit. However I have the payment acknowledgment slip. Can you please suggest / help in this regard. Thanks, Regards, Shailesh Ranjan mob 9810939759

  17. venkat says:

    For Infra Bonds processing, please call or contact or phone me at 9241545354 (for bangalore only).

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