Alpic Fin Bonds Get Nod For Tax Benefits

Alpic Finance Ltd received approval from the Central Board of Direct Taxes to avail of tax benefits for its infrastructure bonds series under three sections of the Income Tax Act 1961, making it the first non-government entity to obtain such permission.

The bonds were declared as eligible security for availing rebate under section 88 for investments upto Rs 70,000 per year. They were also notified as specified securities for claiming capital gains tax exemption under sections 54EA and 54EB.

The bonds amounting to Rs 100 crore, will be privately placed with preference given to smaller banks and institutions. With the tax exemptions, the effective yields would range from 17 per cent to 25 per cent.

 

Funds raised through the bonds will be used to finance various infrastructure projects, viz, sanitation, ports, telecommunication, sewerage and drainage, and transport and health infrastructure. Alpic has arranged finance for infrastructure projects including GVK Industries Power Project in the past.

The bonds are fully secured by a first charge on the assets of the company. Bank of Baroda has been appointed as the Trustee to the bondholders. Alpic may also list the bonds on the NSE.

The issue is divided into two series, Project Infrastructure Bonds and Health and Transport Infrastructure Bonds, each aggregating Rs 50 crore. The Project Infrastructure Bonds has two schemes of income and step up bonds, each with a tenure of five to seven years with early redemption facility after three years.

Alpic Finance has received in-principle approval from the RBI to set up a local area bank and is in the process of incorporating the banking company with the Registrar of Companies.