Power Finance Corp to Launch Inaugural Bonds Allowing Capital Gains Tax Exemption, Energy News, ET EnergyWorld

New Delhi: Power Finance Corporation Ltd (PFC), the state-owned lender to the power sector, today announced that the government has authorized it to raise bonds eligible for exemption from capital gains tax. values ​​under Section 54EC of the Income Tax Act.

Section 54EC provides that the capital gain subject to a maximum of Rs 50 lakh arising from the transfer of a long term fixed asset shall be exempt if the assessee invests all or part of the capital gains in certain specified bonds within a period of six months.

An investor can save up to a maximum of Rs 10 lakh by investing the maximum allowable amount of Rs 50 lakh in these bonds. “PFC intends to launch its first 54EC bond issue shortly and will be kept on watch. The bonds will carry the highest national credit ratings of ‘AAA’ from CRISIL, ICRA and CARE,” said the Non- Banking Finance Company (NBFC) in a statement.

As there is no cap on the amount that can be raised by the issuer, full allocation is assured to investors up to the amount permitted under Section 54EC. Previously, only the National Highways Authority of India (NHAI) and the Rural Electrification Corp (REC) were authorized to issue such bonds.

However, the center amended Article 54EC of the Finance Act 2017 to include any other obligations notified by the State in this respect. Based on this, PFC received government approval for the bond issue under Section 54EC.

The company announced that it also intends to raise Eternal Commercial Bonds (ECBs) and Masala Bonds, in addition to 54EC Bonds, to meet its borrowing needs for the current fiscal year.

PFC is the leading backer of India’s power sector and is the country’s largest infrastructure company by net worth. According to a March 2017 Department of Public Enterprises (DPE) survey, PFC was ranked the seventh most profitable PSU out of 320 PSUs. The company’s total borrowings stood at Rs 4.5 lakh crore at the end of March 2017.

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