Finmin allows PFC to issue bonds free of capital gains tax

State-owned Power Finance Corp has got the government approval for issuing bonds, redeemable after three year 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 June 15, 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 today.
The finance ministry has notified the order, it said.
The section allows a deduction in respect of long term capital gains arising from sell/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 1 year in case of equity shares. This section is specifically for the investment in some bonds which are meant for people who have made some long term capital gains, and would like to save taxes out of such gain.
The company's borrowing in the current fiscal would be at par or over Rs 70,000 crore which include raising funds through green and masala bonds also.
The PFC's annual loan sanction increased by 55 per cent to Rs 1,00,603 crore in 2016-17 from Rs 65,042 crore in the previous fiscal.