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| Edited By: Ashutosh Kumar |Source: DNA |Updated: Mar 17, 2018, 03:29 AM IST
The 54-EC bonds floated by the National Highways Authority of India (NHAI) for the current financial year have failed to enthuse investors.
The issue managed to raise a mere Rs 1,200 crore, less than a third of the targeted Rs 4,000 crore.
“A large part of the fund raised came in February this year,” a senior NHAI official said, confirming the development.
NHAI officials blame the lacklustre show on the realty market slump.
“Over the last few years, the property market in the national capital region (NCR) has not shown any remarkable gain, thereby negating any need to invest in such bonds,” an official said.
The bonds were issued towards the end of last fiscal, when commercial rentals in Delhi and Gurgaon were down at least 25%.
Moreover, the rates in the NCR region have shown a declining trend throughout the current fiscal and are likely to be on the downside through 2010-11 as well.
Experts, however, feel a decline in appetite for these bonds is more to blame. “Generally, the appetite for such bonds is declining as the return on investment is too low. Only mutual funds having debt exposure invest in such schemes. For those having large funds to park, there are many more avenues to deploy the capital,” said Parvesh Minocha, MD (transport), Feedback Ventures.
As per the section 54-EC of the Income Tax Act, any capital gain from sale of long-term capital assets such as real estate or gold can be reinvested to be eligible for tax exemption. For those disposing off property and not willing to reinvest in property yet again, the bonds are a good option.
Long-term capital gain is taxed at 10% without indexation or at 20% with indexation.
The issue, slated to close on March 31, carried a face value and issue price of Rs 10,000 per bond and an interest rate of 6.25% per annum. The minimum application size was five bonds and in multiples of one bond thereafter, and the maximum number was capped at 500 bonds, subject to conditions specified in the Income Tax Act. The bonds are non-transferable, non-negotiable and could not have been securitised. The bonds mature three years after the deemed date of allotment. Syndicate Bank was the trustee and applications could be made at all branches of IDBI Bank and select branches of HDFC Bank and Punjab National Bank.
