The PFC issue has three tenures - 10 years, 15 years and 20 years. For retail investors the coupon rate is 7.36 %for tenure of 10 years tenure, 7.52 % for 15 years and 7.60 % for 20 years.
The allotment would be on first come first serve basis.
Note
PFC is among the seven state-run entities, including NHAI and IRFC as well as NTPC, which have been given permission to raise Rs 40,000 crore in the current fiscal 2015-16 through tax-free bonds
Tax-free bonds are usually issued by government-backed entities to raise long-term funding for infrastructure projects.
The interest earned on these bonds does not attract income tax but investments made in tax-free bonds are not eligible for income tax deductions
The tax free bonds get listed on stock exchanges to offer exit option for investors.
Capital gains made on selling of tax-free bonds on stock exchanges are taxed.
If the holding period is less than 12 months, capital gains on sale of tax-free bonds on stock exchanges are taxed as per the tax slab of the investor.
If bonds are held for more than 12 months, the gains are subjected to tax rate of 20 % calculated after reducing indexed cost of acquisition or 10 % of the capital gains without indexation of the cost of acquisition.
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