REC Tax Free Bonds : 2012

Rural Electrification Corporation Limited (REC) is a public financial institution in the Indian power infrastructure sector. It is engaged in the financing and promotion of transmission, distribution and generation including renewable energy projects throughout India.

REC commenced its operations in 1969 for the purpose of developing the power infrastructure in rural areas.

REC is one of only 16 Indian public sector undertakings to be granted “Navratna” status by the Department of Public Enterprise by virtue of our operational efficiency and financial strength.

The GoI has rated REC’s performance as “Excellent” continuously since Fiscal 1994.

REC has also been ranked among the top ten public sector undertakings in India by the Ministry of Heavy Industries and Public Enterprises for Fiscal 2000, Fiscal 2001, Fiscal 2002, Fiscal 2004 and Fiscal 2005.

The President of India, acting through nominees from the Ministry of Power, currently holds 66.80% of the issued and paid up equity capital of REC.

 

Basic Facts about REC Tax Free Bonds:

Issuer: Rural Electrification Corporation Limited

Issue Open: December 3, 2012

Issue Close: December 10, 2012

Issue Size : Rs 4,500 crores

Face Value: Rs.1000

Minimum Application Size: 5 Bonds (Rs.5000) and in Multiples of 1 Bond (Rs.1000) thereafter

Listing: BSE, NSE (The Bonds are proposed to be listed within 12 working days from Issue Closing Date)

Mode of Allotment: Dematerialised and Physical form

Trading: Only in Dematerialised form

Rating:

• “CARE AAA” by CARE
• “CRISIL AAA” by CRISIL
• “[ICRA] AAA” by ICRA
• “IND AAA” by IRRPL (formerly Fitch Ratings India Pvt. Ltd)

Categories of Reservation (%age of issue Size):

1. Category I– QIB’s- 30%

2. Category II- Non Institutional Investors-15%

3. Category III– HNI’s*- 15%

4. Category IV– Retail Individual Investors**- 40%

* Individuals and HUFs applying for an amount above Rs. 10 lac

**Individuals and HUFs applying for an amount up to Rs. 10 lac

Interest on Application Money Liable to be Refunded (except for ASBA): 5.00% p.a.

Who is NOT eligible to Invest in REC Tax Free Bonds:

a) Minors without a guardian name;
b) Foreign nationals;
c) Non-Resident Indians;
d) Persons resident outside India;
e) Venture Capital Fund and Foreign Venture Capital Investor;
f) Foreign Institutional Investors, Qualified Foreign Investors;
g) Overseas Corporate Bodies;

Can an applicant make additional / multiple applications? Ans: An Applicant can make one or more Applications for the Bonds for the same or other Series of Bonds, subject to a minimum application size of Rs. 5,000 (5 Bonds).  For the purposes of allotment of Bonds under the Issue, Applications shall be grouped based on the PAN, i.e. Applications under the same PAN shall be grouped together and treated as one Application. Two or more Applications will be deemed to be multiple Applications if the sole or first applicant is one and the same. For the sake of clarity, two or more applications shall be deemed to be a multiple Application for the aforesaid purpose if the PAN number of the sole or the first applicant is one and the same.


To Invest in this issue, Kindly click here - download the application form and make use of it.

Benefits to the Investor:

 The income by way of interest on these Bonds is fully exempt from Income Tax as per provisions under section 10 (15) (iv) (h) of IT Act.

 Since the interest income on these Bonds is exempt from tax, no Tax Deduction at Source is required.

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

 As per provisions 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 listed Bonds shall be taxed @ 10% without Indexation or @ 20% with indexation.

For Application forms, prospectus details, Click here.