Power Finance Corp. gets nod to issue bonds exempt from capital gains
PFC has got the government approval for issuing bonds, redeemable after three years and eligible for exemption from capital gains tax
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New Delhi: State-owned Power Finance Corp. (PFC) has got the government approval for issuing bonds, redeemable after three years and eligible for exemption from capital gains tax. This will enable PFC to raise funds for long terms through issuance of tax-free bonds under Section 54EC of the Income Tax Act.
Any bond redeemable after three years and issued on or after 15 June 2017 by PFC as long-term specified asset would be covered under the 54EC of Income Tax Act, the company said in a BSE filing on Monday, which also said that the finance ministry has notified the order.
The section allows a deduction in respect of long-term capital gains arising from sale/transfer of any long-term capital asset (like any immovable property, jewellery or shares) which was held for a period exceeding three years. The holding period should be one year in case of equity shares.
This section is specifically for investment in some bonds which are meant for people who have made some long-term capital gains and would like to save taxes on such gains.
The company’s borrowing in 2017-18 would be at par or over Rs70,000 crore, which includes raising funds through green and masala bonds also. The PFC’s annual loan sanction increased by 55% to Rs1,00,603 crore in 2016-17 from Rs65,042 crore in the previous fiscal.