IRFC Tax Free Bonds

Tax Free, Secured, Redeemable and Non-Convertible Bonds @ 8 - 8.30% p.a Unlike couple of the others, NRI's can apply. HNI applications closed on 28th Jan.. Retail applications still possible till Monday 30th Jan 2012.
There will probably be a big rush for these, so click below for some thoughts:



The Pro's

• Interest rates seem to be at a peak. Depending on whether you apply in the retail or HNI category, if you are in the 30% tax bracket, this is like earning 11.6% to 11.8% p.a for the next 10 years. In a high interest regime, like right now, a senior citizen can get 10.25% max for 5 years.
• In the event that interest rates fall over the next 10 years, you maybe able to flog these off at a pretty decent profit-
• After one  year, the tax liablility on your gain would be 10% unless the DTC determines otherwise.
• No wealth tax.

The Con's

• You will be blocking your money for a loooong time. If you need the money during this period, it may not be easy to dispose these bonds.
• If you do have a 10 year horizon, equity could possibly give you a substantially better return.
• Naturally all the caveats on risk over such a long period apply.
• Big Con!! If you as a retail investor, sell these bonds on the exchange the new buyer will get only 8% which is the corporate rate.

A Look At Pre-Tax Equivalents

Tenor	10 years	15 years
Corporates Tax @ 32.45%	11.84%	11.99%
Individuals (HNIs) tax @ 30.9%	11.58%	11.72%
Individuals (Retail)
Tax @ 10.3%	9.09%	9.25%
Tax @ 20.6%	10.26%	10.45%
Tax @ 30.9%	11.79%	12.01%

The Nitty Gritty

• Issue Opening Date: 27th January 2012
• Issue Closing Date: 10th February 2012 Unless over-subscribed.

Credit Rating:
“CRISIL AAA/Stable
 “CARE AAA”
“ICRA AAA” Allotment Basis: First-come-First-serve basis.

Four Categories Allocation.

QIB:                  30%

Corporate:         20%

HNI:                  25%

Retail:                25% ( Below Rs. 5 lacs)

 Tax Free Rate of Interest

• For investments below Rs. 5 lacs, 8.15%  for 10yrs, 8.30%  for 15yrs 
• For investments below 8.0%for 10yrs, 8.10 for 15yrs

REQUIRED DOCUMENTS:For Indian Citizens:
A. To apply in Demat form:

1. Cheque OR Demand Draft.
2. PAN Card copy (self attested)
3. Cancelled Cheque

B. To apply in Physical form:

1. Cheque or Demand Draft (DD)
2. PAN Card copy (self attested)
3. Cancelled Cheque
4. Self attested Copy of Address Proof: ration card OR passport copy OR recent bank statement OR recent passbook OR recent telephone bill OR driving license OR home rental/sale agreement OR any government identity which has your addres