This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at [email protected]
Investors who invest in fixed income instruments, like fixed deposits, company deposits, NCDs, infrastructure bonds, tax-free bonds etc., eagerly wait for the day on which the interest payment gets credited into their bank accounts. For some of the investors, this interest income is a substantial portion of their annual income. So, they need to know the exact date of their interest payments, especially with those investments with which they are not much familiar. Tax-Free bonds also fall into that category of investments for which investors keep asking for more information.
Ramesh wanted to know the date on which HUDCO would be paying its first annual interest.
Ramesh July 3, 2013 at 12:12 am
When will Hudco pay the annual interest on their1 2013 tax free bonds.
Karthik also wanted to know if there is any website which carries such information at a single place.
Karthik Reddy Chintaparthi July 3, 2013 at 8:39 am
How can we keep track of the interest these companies pay ? Any online website ?? Please confirm.
National Stock Exchange (NSE) website has a list of all the bonds and NCDs which are listed on its exchange and get traded on a regular basis. Here is the link to the list of bonds which get traded on the Capital Market (CM) segment of NSE.
But this link also does not have all the interest payment dates on a single page. If any of you want to check the next interest payment date of any of your tax-free bonds, then you are required to click on the name of the company from this list, select the ‘Series’ of the bond and click on the Securities Information tab. Next IP Date is the information that you were seeking.
I am not aware of any such link of BSE which lists all the BSE-listed bonds/NCDs on a single page. So, you are required to check your bond holding with its BSE Code and you need to repeat the process if you are holding multiple bonds.
When I could not thought of any such source which has all the dates for all such issues, I decided to write this post having all the interest payment dates for all the tax-free bonds which got issued during FY 2011-12 and 2012-13.
During FY 2011-12, five public sector undertakings (PSUs) issued tax-free bonds – National Highway Authority of India (NHAI), Power Finance Corporation (PFC), Indian Railways Finance Corporation (IRFC), Housing and Urban Development Corporation (HUDCO) and Rural Electrification Corporation (REC).
During FY 2012-13, nine PSUs issued such tax-free bonds – PFC, IRFC, HUDCO, REC, India Infrastructure Finance Company Limited (IIFCL), Ennore Port, Dredging Corporation, National Housing Bank (NHB) and Jawaharlal Nehru Port Trust (JNPT). NHAI decided to give it a miss last year as it did not require any additional funding.
Here is the table carrying the interest payment dates for all of the tax-free bonds issued by these companies.
Tax-Free Bonds Issued During Financial Year 2012-13
Tax-Free Bonds Issued During Financial Year 2011-2012
If any of you want to know the interest payment dates of infrastructure bonds issued during 2011-12, please check this link.
Tax-Free Bonds in Physical Form – If you had taken these tax-free bonds in the physical form, then you must have given a cancelled cheque of your bank account along with your PAN card copy and the address proof. Your interest payment gets credited directly into the same bank account, of which you gave the cancelled cheque.
Tax-Free Bonds in Demat Form – If you had taken these bonds in your demat account, then the company will credit the interest payment directly into your bank account which is currently linked to your demat account.
If you have any query regarding any of your interest payment related issues, you should contact the respective Registrar at the contact numbers mentioned in the table above.
sir, if i purchased HUDCO 8.76% Tax Free bond on 15/01/2015 for Rs.1146/ Per Bond now if i want to sell by tomorrow how much amount of interest i can receive pl. reply
thanks.
Depends on IP date of the bond. If you sell your bonds before IP date you will get no interest per se. But the sale price of the bond would be higher by an amount equivalent to the interest accrued till the sale date. If you sell the bonds after the IP date you will get the total yearly interest but the sale price would be lower than the price at which you bought them. This is what I understood from Mr Kukreja’s reply earlier to a similar query of mine.
Thanks Mr. Krishnamurthy for your response!
Just want to clarify that it is not the IP date that you should focus on, rather it is the Record Date on which the bonds should be there in your demat account. If you are buying these bonds just for getting the interest amount, you need to buy it at least a day or two before the Record Date.
Hi Meena,
If you sell your 8.76% HUDCO bonds now, you’ll not get any interest on the interest payment date, which is either on October 25th or January 13th. You’ll only get a higher sale price for your bonds.
Sir i want to know that if i had purchased the bond of HUDCO 8.76% Tax Free Bond on dt.15/01/2015 for Rs.1148/- per Bond. now, i want to sell it by tomorrow than what amount ofinterest i will receive can you pl. reply.
thanks
Dear Shri Kukreja,
I am looking for investment advisor on shares ,bonds anf mutual funds. Can you advise the credible name?
Please advise the annual interest payment dates for the following Tax Free Bonds :
1 HUDCO allotted in Oct.’ 2013
2. NHAI allotted in Feb.’2014.
3. REC allotted in Sept.’2013
4. PFC allotted in Nov.’2013
5. IRFC allotted in Feb.’2014
6. IIFL NCDs allotted in Sep.’2013
Thanks for a *very very* useful post. I have > 10 tax free bonds in my portfolio. Along with the work that I have to for other members of family, it is > 20 bonds. Till date, there is no easy way to track if interest payment has happened for these bonds. There is also no easy way to monitor the bonds value.
Even the personal finance sites like myuniverse, perfios don’t provide this facility. Ultimately, I am using excel to track. Plus I have downloaded and kept all the links from BSE into the excel and also marked the interest payment date. Plus I have to keep on updating the excel now whenever an interest payment is received.
After all this, I have found that I have not received any interest from Jawaharlal Nehru Port trust. So now I have to run after them. Its a big problem to have say > 5 tax free bonds. I have some constraints so have to do this. Otherwise, because of (Extremely) poor customer service from karvy and the amount of time to be taken to track this and then run around for mistakes, I think better to avoid tax free bonds even though theoretically they are a good investment.
I hope this comment is useful and adds value to your very informative post.
Thanks
Thanks RV for sharing your experience here, I hope it is of use to some tax free bond investors !!
I have some 9.75% SBI Bonds (S3)traded during 1st week of May 2014. What is the date from which I am elegible for interest in the bonds?
when will the interest be credited to my bank account. if I sell the bonds say by November this year what will happen to the interest portion?
pl. clarify
Hi R V Kumar,
You’ll be eligible for the “full year” interest payment of 9.75% p.a. and it will be credited to your bank account on April 2nd/3rd every year.
If you sell these bonds in November 2014, then you’ll not get any interest amount credited to your bank account in April 2015. But, you’ll get accrued interest in the form of capital appreciation on the sale date.
Thanks for the precise reply.
You are welcome!
If I buy a listed bond (say PFC, the IP date of which is 15th October) now on 20th September 2013, will I get the tax free interest (8.2%) from 16th October 2012 till 15 th October,2013 or from 20th Sept. 2013 till 15th October,2013 ?
You’ll get interest amount for the full year from 16th October 2012 till 15th October 2013. Sorry for a very late reply.
Thank you very much for the clarification.
You are welcome!
Interest from tax free bonds interest should be reported as exempt income in schedule EI of Indian income tax return.
Does anyone know if it should be declared as interest income or dividend income ?
Thank you.
How about interest from infrastructure bonds (those that used to give benefits under 80CCF)?
Do these incomes raise the tax bracket of the taxpayer?
Interest income from Infrastructure Bonds is taxable and thus it should be added to your “Income from Other Sources”.
Thanks for your both your responses, Shiv.
You are welcome Vikas!
Hi Vikas,
It is definitely interest income.
Thanks you sir
You are welcome Vikas!
Thank you.
There is a step-down for some bonds, right?
Hi Austere,
Yes, all these bond issues have step-down interest feature, except the first two issues of FY 2011-12 i.e. the NHAI issue (8.30% & 8.20%) and the PFC issue (8.30% & 8.20%). All bond issues of FY 2012-13 have 0.50% p.a. step-down interest clause, whereas it was lower for the rest of the 3 issues of FY 2011-12.
Please check this table: http://www.onemint.com/wp-content/uploads/2012/07/Tax-Free-Bonds-Mid-Year-Update.png