Frequently Asked Questions on Infrastructure Bonds
1. What is the Tax Treatment of interest on these Bonds?
The interest received on these bonds shall be treated as income from any other source and shall form part of the total income of the assessee in that financial year in which they are received.
2. Who are the eligible investors?
Only Resident Indian Individuals (Major) and HUF can invest in these bonds.
3. Can a Minor apply for subscription to these bonds?
A minor is not eligible to apply for subscription to these bonds.
4. Are these infrastructure bonds Tax Free?
No, the interest received in these bonds is not tax free. The investor is liable to pay tax on the interest received
5. Will TDS be deducted on these bonds?
No TDS shall be deducted on interest with respect to bonds issued in Demat mode. TDS will apply with respect to bonds issued to investors in physical form.
6. I don't have Demat Account. Can I apply?
Yes investors who do not have any Demat Account can apply for the bonds in physical form. Additional requirements for applying in physical form are given in the Annexure.
7. I only have a joint De-mat account. Can I apply in my own name only?
The name of applicant shall be same as the holders of Demat account. In case of single applicant the demat account shall also be held in the name of the same single applicant.
8. Can I apply in joint names?
Yes application can be made in joint names with a maximum of three applicants, however the demat account shall also be held in the joint names and order of applicant shall be the same as appearing in the demat account. In case of application made in joint names, the tax benefit shall only be availed by the first applicant.
9. What is the maximum amount for which the benefit u/s 80CCF be availed?
Maximum benefit to an investor shall be Rs. 20,000/-- under section 80CCF of the Income Tax Act, 1961
10. What would happen if I apply amount more than Rs. 20,000?
The allotment shall be made for the sum applied, however the benefit under section 80CCF may only be availed for a maximum sum of Rs. 20,000
11. Can I invest in both the options?
Yes an applicant may subscribe in both the options but the minimum application under each option shall be one bond i.e. Rs.5000/-
12. What is the benefit of investing in Tax Saving Infrastructure Bonds if they offer the same tax benefit?
The Tax exemption benefit under Sec 80CCF on a sum of Rs. 20,000/- is over and above Rs.1,00,000/- benefit under section 80C, 80CCC and 80CCD.
13. What is the tenure & lock-in period of these Infrastructure Bonds?
The Tenure of bonds under both the series shall be 10 years and bonds shall be locked-in of 5 years
14. Who can offer these Long Term Infrastructure Bonds?
The entities like LlC, IDFC, IFCI and other NBFCs which are classified as Infrastructure Finance Companies by RBI shall be allowed to issue these long term infrastructure bonds.
15. I Don't have a PAN card. Can I still apply for subscription?
PAN card is mandatory for subscribing to these bonds.
16. How will I get my interest on the due date?
The interest shall be credited to the respective Bank account registered with the Demat account (and for the bond held in physical form in the bank account indicated in cancelled cheque attached with the form as mentioned in Annexure I through ECS on the due date for interest payment, and if the due date is a public holiday then the next working date.
17. Can I get loan on these bonds?
You cannot avail of any loan by pledging these bonds in the first 5 years. Thereafter, these bonds may be pledged to avail loan
18. Where shall I submit the application forms?
The application form may be submitted at the branches collecting banks whose addresses are mentioned on the application forms.
19. Who shall pay the interest and repay the Principal amount?
IDFC shall pay the interest on these bonds and also the principle amount to the Investor upon maturity of the bonds or at the time of buy back. The bonds are credit rated as “LAAA” with stable outlook indicating safety of highest order
20. Who would get the interest in case of the joint application?
In case of joint application the interest shall be paid to the account of the first applicant only.
21. Is it ok to submit photocopy of all the 3 documents mentioned in the Annexure?
As long as the documents are self attested, the photocopy all these documents can be submitted with the application form.
22. Mode of Holding can be Either or Survivor?
When the bonds are held in joint names and one of the joint holders dies, the survivor(s) will be recognized as the Bondholder(s)
23. Will there be TDS in Physical Form? (As per the General Instruction 12, to Avail TDS investor can submit 15G/15H)?
In case the bonds are held in physical form, no TDS is applicable as long as the interest received does not exceed Rs. 2500 per year. However such interest is taxable income in the hands of resident bondholder. If the interest exceeds Rs. 2500, to ensure non-deduction of tax as source the bondholder are required to furnish either (a) declaration [in duplicate] in the prescribed form i.e Form 15G. In case of Senior citizens it should be 15G.
24. Nomination process in case opted for physical?
IDFC would provide the investors holding the bonds in physical form, nomination facility at the time of sending the bond certificates
25. Is it necessary to provide the identity and address proof in case of second and third holders?
The address and identity proof must be provided for all the joint holders of the bonds. The cheque details would be required only for the account in which the payments need to be credited.
26. What is the issue opening and closing date?
The issue opened for subscription from January 17, 2011 and shall be closing on February 4, 2011
27. Who are the collecting bankers to the issue?
The bankers to the issue are HDFC, ICICI, Axis, IDBI, and Kotak Bank
28. In whose favour the cheque is to be made?
Cheques has to be made in the favour of “IDFC Infra Bonds – Tranche 2”
29. Can Intercity clearing cheques acceptable?
No, cheques has to be payable at par or local clearing cheques are only allowed.
30. Can I accept NRI application?
NRI's are not allowed to invest in this issue.
31. Will the shares Bonds be traded on the exchange?
Shares Bonds will be listed on BSE & NSE for trading. Trading will commence post completion of the lock in period
32. Under cumulative option, when will I get the interest amount?
Under cumulative option, Interest will be paid at the end of 5 years if buyback option is exercised or at the time of maturity
Annexure I – Additional requirements in case an applicant is not having a Demat Account
Applicant who wishes to subscribe to the Bonds in physical form shall undertake the following steps:
• Don’t fill up the demat details in the application form
• Compulsorily provide the following three document with the application form
o Self-attested copy of the PAN card;
o Self-attested copy of the proof of residence. Any of the following documents shall be considered as a verifiable proof of residence:
ration card issued by the Government of India; or
valid driving license issued by any transport authority of the Republic of India; or
electricity bill (not older than 3 months); or
landline telephone bill (not older than 3 months); or
valid passport issued by the Government of India; or
Voter’s Identity Card issued by the Government of India; or
passbook or latest bank statement issued by a bank operating in India; or
leave and license agreement or agreement for sale or rent agreement or flat maintenance bill; or
letter from a recognized public authority or public servant verifying the identity and residence of the Applicant.
o Self-attested copy of a cancelled cheque of the bank account to which the amounts pertaining to payment of refunds, interest and redemption, as applicable, should be credited.
Thanks,
Gaurav Agarwal
Head Dealer
DENIP Consultants Pvt Ltd
No comments:
Post a Comment