Explore the tax-free bond market in India: A review of the most recent issues. 

 

Due to their attractive tax benefits, investors are increasingly interested in India’s tax-free bond market. Government agencies issue these bonds in India, meaning they have low default risk and provide a steady income for investors. This blog will discuss the most recent issues on the tax-free Indian bond market. 

Indian Railway Finance Corporation (IRFC). 

In January 2021, the Indian Railway Finance Corporation (IRFC) issued tax-free bonds for Rs 2,226 crore. These bonds are valid for 10 years with a coupon rate of 5.63%. The IRFC, a government-owned company, provides financial assistance for Indian railways. 

National Highways Authority of India (NHAI): 

In December 2020, the National Highways Authority of India issued tax-free bonds for Rs 2,000 crore. These bonds are valid for 10 years with a coupon rate of 5.1%. The NHAI is responsible for maintaining and developing national highways in India. 

Housing and Urban Development Corporation (HUDCO). 

In September 2020, the Housing and Urban Development Corporation (HUDCO) issued tax-free bonds for Rs 5,000 crore. These bonds are valid for 10 years with a coupon rate of 6.79%. HUDCO is a financial aid organization that provides financial assistance to Indians for urban infrastructure and housing. 

Indian Renewable Energy Development Agency (IREDA): 

In July 2020, the Indian Renewable Energy Development Agency issued tax-free bonds for Rs 1,000 crore. These bonds are valid for 10 years with a coupon rate of 4.87%. The IREDA offers financial assistance to India for projects involving renewable energy. 

Power Finance Corporation (PFC). 

In June 2020, the Power Finance Corporation (PFC) issued tax-free bonds for Rs 5,000 crore. These bonds are valid for 10 years with a 6.8% coupon rate. The PFC offers financial assistance to power projects in India. 

The government’s commitment to infrastructure development and renewable energy projects is evident in these latest Indian tax-free bonds. These high-rated bonds have low default risk and provide investors with a steady income stream. 

Tax-free bonds are a tax-efficient way to invest and offer investors a low-risk option. Investors can keep more of the interest they earn on tax-free bonds because it is exempted from income tax.

Tax-free bonds are a great option for investors looking to balance return and risk. They have historically provided a higher return on fixed deposits than tax-free bonds. 

The tax-free Indian bond market is a good investment choice for investors earning tax-free income or building a low-risk portfolio. Recent issues in India’s tax-free bond market by government entities like IRFC and NHAI, HUDCO and IREDA show the government’s commitment to infrastructure development and renewable energy projects. As part of a diversified portfolio, investors should consider tax-free bonds.