National Highways Authority of India (NHAI) Tax Free Bonds

This issue is offered by NHAI - National Highways Authority of India - an autonomous authority of the GOI under the Ministry of Road Transport and Highways.

The key highlight of this issue is that the income by way of interest on these bonds will be fully exempt from Income Tax and hence would not form a part of taxable income. If this was not exciting enough, the icing on the cake is that the yield in this bond is 8.20% for 10 years and 8.30% p.a. for 15 years. The minimum investment amount would be 50,000.

Along with an attractive post tax yield, the issue is also rated 'AAA" by agencies like CRISIL, FITCH and CARE. 'AAA' rating represents highest safety and stability. The bonds will be listed on the Bombay Stock Exchange and the National Stock Exchange. To read more on the issue, click here.

The issue is scheduled to start on December 28, 2011 and will be made available on ICICIdirectcom and other brokerage firms.. Please note that the allotment will be on first come first serve basis.

NATIONAL HIGHWAYS AUTHORITY OF INDIA
Issue Opening Date	28/12/2011
Issue Closing Date	11/01/2012
Issue shall remain open for subscription for a minimum of 3 days or such extended period upto a maximum period of 30 days from the date of opening of the Issue. In case of early closure, NHAI shall ensure that public notice of such early closure is published on or before the day of such early date of closure through advertisement/s in a leading national daily newspaper
HIGHLIGHTS OF THE BOND ISSUE
Issuer	National Highways Authority of India
Nature of Instrument	Tax-Free Secured Redeemable Non-Convertible Bonds in the nature of Debentures
Issue Size	Rs. 5,000 crore with an option to retain oversubscription of upto Rs. 5,000 crore
Tax Benefits
	1. The income by way of interest on these Bonds shall not form part of total income as per provisions under section 10 (15) (iv) (h) of I.T. Act, 1961;
2. There shall be no deduction of tax at source from the interest, which accrues to the bondholders in these bonds irrespective of the amount of the interest or the status of the investors;
3. 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;
4. Wealth Tax is not levied on investment in Bond under section 2(ea) of the Wealth-tax Act, 1957.
Instrument Form	At the option of investors, in dematerialized as well as in physical form
Security	Pari passu charge on the immovable property situated at Ahmadabad and exclusive first charge on fixed assets of NHAI, being highway project comprising of all superstructure including highway lightings, road barriers and dividers, bridges, culverts and all other super structures constructed on national highways entrusted to NHAI
Credit Rating	“CRISIL AAA/Stable” by CRISIL, “CARE AAA” by CARE and
“Fitch AAA(ind)” by FITCH
Face Value	Rs. 1,000/- per Bond
Issue Price	At par i.e. Rs. 1,000/- per Bond
Minimum Application	50 Bonds (Rs. 50,000/-) and in multiples of 1 Bonds (Rs. 1,000/-) thereafter
Tranche	Series-I	Series-II
Tenor	10 Years	15 Years
Put & Call Option	None	None
Maturity/ Redemption	At par on the expiry of 10th Year from the Deemed Date of Allotment	At par on the expiry of 15th Year from the Deemed Date of Allotment
Coupon Rate	8.20% p.a.	8.30% p.a.
Interest Payment	Annual	Annual
Interest Payment Dates	Every year on October 01, and on respective maturity
Listing	Proposed on BSE Ltd. (“BSE”) and National Stock Exchange of India Ltd. (“NSE”). The Designated Stock Exchange for the Issue is BSE
Trustee	SBICAP Trustee Company Ltd.
Interest on Application Money	At the respective coupon rate on Bonds (subject to deduction of tax at source, as applicable) will be paid to the eligible applicants to whom the Bonds are allotted pursuant to the Issue on the amount allotted from the date of realization of the cheque(s)/demand draft(s) or 3 (three) days from the date of receipt of the application (being the date of submission of each application as duly acknowledged by the Bankers to the Issue) whichever is later upto one date prior to the Deemed Date of Allotment.
@ 4.00% p.a. (subject to deduction of tax at source, as applicable) on application money which is liable to be refunded to the applicants from the date of realization of the cheque(s)/demand draft(s) or 3 (three) days from the date of receipt of the application (being the date of presentation of each application as acknowledged by the Bankers to the Issue) whichever is later upto one day prior to the Deemed Date of Allotment. Such interest shall be paid along with the monies liable to be refunded.

The coupon rate is 8.20% under 10 years plan and 8.30% under 15 years plan, for the value of Rs 5000 Crore with option to retain oversubscription of Rs 5000 Crore with face value of bonds of Rs 1000/- each at par value.

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