PFC to raise Rs 250 cr via infrastructure bonds

Power Finance Corporation (PFC) is making a Rs 125-crore issue of infrastructure bonds with income-tax benefits under section 88 of the Inco...

Power Finance Corporation (PFC) is making a Rs 125-crore issue of infrastructure bonds with income-tax benefits under section 88 of the Income Tax Act of 1961. The issue, the first such by PFC, is aimed at retail investors.

PFC expects to raise Rs 250 crore, since it has a greenshoe — or right to retain oversubscription — option of Rs 125 crore.

The Central Board of Direct Taxes (CBDT) cleared the IT benefit under section 88 in August this year. Investors will get a tax rebate of 15 per cent for the five-year life of the bonds for a maximum amount of Rs 1 lakh in a financial year. So far, only IDBI and ICICI Bank had been allowed to issue such bonds with IT benefits.

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PFC has also applied to CBDT for notifying the bonds under section 80 (L) of IT Act. Upon notification, investors can claim deduction from the total income up to Rs 12,000 in respect on bonds.

PFC will use the funds to augment its long-term resources and to deploy towards infrastructure projects.

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