Mumbai, Sept 25: The National Bank for Agricultural and Rural Development (Nabard), which plans to come out with three-year Capital Gains Bonds on September 28, expects to mobilise about Rs 1,600 crore to Rs 2,000 crore by the end of current fiscal. Proceeds from this bond issue would be used for funding agriculture and rural development as per the Union Budget. Nabard managing director YC Nanda told reporters on Monday that pursuant to this year's union budget, investment of capital gains on assets transferred on or after April 1 this year in these bonds would qualify for exemption from capital gains tax under the new section 54 EC of the Income Tax Act (1961). The investments with a minimum of Rs 10,000 and in multiple thereof would get full and firm allotment. Nanda said that Nabard is expecting presidential assent and expects to float the proposed bond from September 28. The issue would be open for all applicants who want to avail exemption from Capital Gains Tax such as corporates, non-corporates, Trusts, minors and individuals. The rate of intcome tax on Capital Gains is 10 per cent (plus surcharge of 15 per cent) for shares and securities and 20 per cent (plus surcharge of 15 per cent) for other assets. The rate of interest on these bonds would be decided on market conditions. However, Nanda hinted at a rate of interest ranging between 7.5 per cent and 10 per cent. Nanda said that these bonds would have a maturity period of three years and there will be a minimum lock-in period of three years. The bonds would not be transferred/assigned or negotiated to any other person, but looking at the redemption dates, the actual lock in period of these bonds may be little more. On Nabard's refinance target, Nanda said that it has pegged at Rs 6,000 crore for the current fiscal from the previous year's Rs 5,200 crore. Its non-performing assets are less than 1 per cent of the total lending of Rs 1,14,000 crore since Nabard's inception.
