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]
It has been a very long time since Deepak suggested Manshu and me to cover a post having post-listing details of tax free bonds issued during last three financial years. Like a large number of investors, he too has been struggling to keep himself updated with different interest payment dates, scrip codes, scrip ids, ISIN numbers of these bonds, which of these bonds carry step-down feature and many such things.
This is what Deepak had to say:
Deepak October 28, 2013 at 4:28 pm
Hi Shiv, (I have given the same suggestion to Manshu. Please speak to him as well)
There are a number of tax free bonds in the market every year, for the past 3 years.
The interest rates are different for each bond in each year!
What makes it more complicated is that the interest rates are different for the same bond if you have got a direct allotment or bought it from the stock market.
Each one comes with a different date of interest payment.
With all this, it has become really difficult to track the interest payment. I also find it difficult to link the bonds to their Scrip ID and Code because of the long list of bonds in my statement.
I also don’t know in which month will I receive the interest of the bonds that I purchased last year.
Would it be possible for you to have a table with the following details as one of your articles?
Company
Year of Issue
ISIN
Scrip Id
Scrip Code
Rate of Interest (Direct Allotment)
Rate of Interest (If purchased later)
Due date of interest
And anything else that you find appropriate…
I’m certain it would benefit a lot of people.
Regards,
Deepak
As both of us have been keeping very busy for the past many weeks, we were not getting enough time to cover this post and work on Deepak’s requirements. As I just got time to cover this post, here is the table which should help most of us to keep ourselves updated with the deemed date of allotment of these tax-free bonds, their interest payment dates, BSE codes, NSE codes, maturity dates and their respective coupon rates applicable to the retail investors as well as other investors.
Tax-Free Bonds issued during Financial Year 2013-14
(Note: Table updated on March 31, 2014)
Deepak wanted us to cover these details for all the tax free bonds issued during the past three years. But, to begin with, I have covered these details only for the current financial year i.e. FY 2013-14. I want to experiment this post with the current financial year and will cover the details of previous years’ tax-free bonds separately in two other posts. I’ll also keep updating this table as and when the remaining companies launch their respective issues and get these bonds listed on the stock exchanges.
I would also request you to share your views regarding this post and suggest some more ideas for the other two posts so that I can cover more such details about these listed bonds.
Hi Shiv,
I found your posts listing tax free bonds issued in different financial years very useful. it gives all the relevant info in one table. My compliments on this initiative.
It will be really helpful if you could also add the record dates for interest payment. At present you have mentioned only the interest payment dates.
I request this because in some cases, the record date is not necessarily 15 days prior to the interest payment date.
Thanks & regards.
Dear Shiv,
Can you please let me know the maturity value of the bonds as on maturity date ? Is it the purchase value of the bonds OR the market value as on date ,as currently for example PFC 2013-14 tax free bonds are trading at around 1300 rupess against purchase price of 1000 rupees ?
Hi Shiv,
Would it be possible to update Interest payment date for TFBs released in last 2 years?
Thanks
Praveen
I had purchased no of tax free bonds, some physical and some in DMAT due to improper form filling. Your table was very useful to check whether all interests were paid and for organizing myself for future expectation.
Thank You.
You are welcome Geeta!
I have read your article and found it very informative. Can you please post me some information about when the fresh batch of tax free bonds will hit the market.can i get the details or update information of their arrival.
Thanks Purnima!
You can subscribe to our free newsletter – http://www.feedburner.com/fb/a/emailverifySubmit?feedId=2525998&loc=en_US
You’ll get all the updated information regarding issuance of tax-free bonds and their expected rate of interest as & when we post an article.
Hi Shiv,
I want to sell some of my tax free bonds. Can I do this through my trading account? Could you please let me know the process?
Thanks!
Hi PP,
There is no difference in the process of selling shares and selling your tax-free bonds. Just log into your account and place the bid price at which you want to sell your bonds or contact your broker & instruct him to sell your bond holdings.
Thanks Shiv! That’s helpful.
What would be the income tax treatment for the capital gains component? Would it be taxed as per the slab?
– PP
LTCG on listed bonds is taxed at a flat rate of 10%.
Thanks for your instant reply!
Last question (hopefully): Long term in case of these bonds is 1 year?
Yes, it is one year.
Excellent. Thanks!
You are welcome!
Hi Shiv,
I’ve sold some of my bonds this year. Will I get prorated interest on the interest payment date?
– PP
No PP, you’ll not get any interest. The buyer will get all the interest amount.
Excellent article… Shiv. Hats off to you… for the effort put in by you in collating the data.
Thanks a lot for your kind & encouraging words! 🙂
sir,
i received interest warrant from HUDCO TAX FREE BONDS 2012 TRANCHE-I, but name on the warrant is different and bank is not accepted and credited. plz guide me
Hi Ami,
You need to contact the Registrar, Karvy Computershare to get your details rectified with them. Contact no. and email id of Karvy Computershare is as follows – 1-800-3454-001 , [email protected]. You can post your query through this link also.
Hi Shiv
I have a similar query in terms of interest not received for IRFC Tranche I 2014 tax free bonds. The link you have provided in response to Manmohan’s query is for checking of application status. Could you pl let me know what is the email id/phone number etc. for writing/talking to concerned agency.
Thanks
Rahul
Hi Rahul,
Contact no. and email id are also there in that link – Contact Us : 1-800-3454-001 , [email protected]. You can also post your query through that link.
Very good article.
Would you please guide whom to write in case of non receipt of interest.
I have not received interest of IIFCL bond Trchie II for 15 years for 500 bonds.
Shall appreciate an response
Thanks Mr. Manmohan!
Please check this link, you need to contact Karvy Computershare for the same – http://mis.karvycomputershare.com/ipo/
sorry i sold on record date i.e after Ex-date .. still faced a lots of problem..
Dear Dr. Agarwal,
Differential coupon rates were applicable to the primary and secondary holders of tax-free bonds which got issued during financial year 2012-13. So, for you or other investors, who bought these bonds last financial year, it doesn’t really matter whether you are primary bondholder or secondary.
But, in your case, I think your bonds got transferred to your broker’s Pool account, your broker got full interest, but it transferred to you lesser interest and kept the differential interest with itself. So, I think you need to raise your voice against your broker or the Registrar to get back the differential amount.
Dear Mr Shiv & Mr Dev.
I also got lesser interest for Hudco 9.01 % from Dalmia Securities ..I sold on ex-date and bonds were withdrawn same day to broker Pool acccount . what is difference between Primary & secondary holder … hudco is liable to pay same interest wether is in my DP or broker pool a/c. ?? pl. suggest..
wish to invest some good tax free bonds . is anything coming this year ? or should i buy from secondary market? please advice me how to buy these ?
thanks
No tax-free bond issues will be there this financial year. I think you should wait for the Budget on 28th Feb to get clarity whether any such investment option will be there next financial year or not. If you can bear some risk of equity investments, then you can wait for the government’s second CPSE ETF issue to be launched next month. These ETFs also provide tax-free returns and last year’s ETF had ‘bonus’ clause as well.
To buy tax-free bonds from the secondary markets, you need to ask your broker to help you buy these bonds as you buy equity shares from the secondary markets.
Hi Shiv,
Hope you are doing well.
I had some HUDCO-N5 (7.51 NCD 16FEB28 Tr1 Sr2; ISIN INE031A07865) bonds which i sold on 30th Jan 2015 (ex coupon date as per BSE, record date 2nd Feb 2015), the interest payment on this bond was due on 16th Feb 2015, since i sold these bonds on ex-date i should get interest but i didn’t receive any interest yesterday. How can i claim the unpaid interest? should i wait another couple of days?? any help on this will be really appreciated.
Thanks – Dev
Hi Dev,
I’ve been getting such queries on a regular basis these days. Not 100% sure, but I think the problem lies somewhere with the settlement period. Securities, whether bonds, NCDs or equity shares, are getting debited from the demat account either on the same day or the next day of the transaction date. So, the investor, who sells it on the ex-interest or ex-dividend date, is not getting the interest/dividend paid as his/her name is not there in the books of the Registrar on the Record Date. I think its like a scam, we need to dig deep into it to find out the reasons. It is quite possible that brokers are eating into these interest or dividend payouts, but nobody is bothered about retail investors here. In your case, you need to ask your broker the reason for not getting the interest payment. If not satisfied with your broker’s response, you can approach SEBI.
Thanks for your reply Shiv. I sold these bonds through HDFC Securities, checked with them and they said they haven’t received any payment, asked me to check with registrar (Karvy in this case), have already written an email to Karvy and waiting for their reply. I think you are right, they debit bonds/stocks on the same day and not the next day.
Regards
Dev
Hi Shiv, i contacted and HDFC securities and they credited the interest in my account, though the amount is @ 7.51% and not 8.01% as they must have showed up as secondary holder in the books of registrar and not primary.
Thanks
Dev
Hi Dev,
HDFC Securities did it only after you contacted them and that too, at 7.51% and not 8.01%. If you were the primary holder of these bonds, then you should have got it @ 8.01% and not 7.51%. I think there is something fishy in all these transactions. If these brokers/Registrars are eating into investors’ interest/dividend income, then it is time that SEBI needs to take strict action against these brokers or the Registrars which are involved in such acts.
Hi Shiv, I have a query about capital gain tax on these tax-free bonds. In last budget Govt. changed rules or long term tenure for debt mutual funds from 1 year to 3 years, what is the long term for these bonds? is it still 1 year or it has changed to 3 years?? and what are the long and short term capital gain tax rates on these bonds?
Thanks for your help.
Dev
Hi Dev,
Long term for tradable bonds including tax free bonds & NCDs is still 1 year and the applicable LTCG tax rate is flat 10%. STCG tax is as per the tax slab of the investor.