Tax Free Bonds
Tax Free Bonds are a category of bonds in which the coupon or interest payments are exempt from income tax under Section 10(15)(iv)(h) of the Income Tax Act, 1961. These bonds are listed on stock exchanges, and thereby investors can buy bonds and sell them in NSE/BSE (secondary market) if they wish to sell before maturity.
IRFC Tax Free Bonds are AAA bonds, indicating minimal default or credit risk. These tax free bonds are ideal for risk-averse investors seeking tax-efficient and steady returns.
Active IRFC Tax Free Bond Options
Below is the list of active IRFC tax free bonds listed on NSE and BSE:-
| Issue Description |
Coupon Frequency |
ISIN Number |
Maturity Date |
| Issue Description |
Coupon Frequency |
ISIN Number |
Maturity Date |
| 7.64% IRFC Tax Free |
Annual |
INE053F07900 |
22 March 2031 |
| 7.53% IRFC Tax Free |
Annual |
INE053F07835 |
21 December 2030 |
| 7.34% IRFC Tax Free |
Annual |
INE053F07579 |
19 February 2028 |
| 7.50% IRFC Tax Free |
Annual |
INE053F07843 |
9 December 2035 |
| 8.10% IRFC Tax Free |
Annual |
INE053F07538 |
19 February 2027 |
| 7.04% IRFC Tax Free |
Annual |
INE053F07595 |
23 March 2028 |
| 8.65% IRFC Tax Free |
Annual |
INE053F07686 |
18 February 2029 |
| 8.63% IRFC Tax Free |
Annual |
INE053F07728 |
26 March 2029 |
| 8.88% IRFC Tax Free |
Annual |
INE053F07744 |
26 March 2029 |
| 7.25% IRFC Tax Free |
Annual |
INE053F07819 |
21 December 2035 |
| 7.35% IRFC Tax Free |
Annual |
INE053F07884 |
22 March 2031 |
| 7.28% IRFC Tax Free |
Annual |
INE053F07801 |
21 December 2030 |
| 8.40% IRFC Tax Free |
Annual |
INE053F07660 |
18 February 2029 |
54EC Capital Gain Bonds
Issued under Section 54EC of the Income Tax Act, capital gain bonds allow investors to reinvest their long-term capital gains (LTCG) realised from the sale of land and/or buildings to reduce their LTCG tax liability. These capital gain bonds offer fixed returns of 5.25% p.a. and are issued by select public sector companies such as Power Finance Corporation Ltd (PFC Bonds), Rural Electrification Corporation Limited (REC bonds) and National Highways Authority of India (NHAI Bonds).
IRFC Capital Gain Bond Issuances
IRFC issued IRFC Capital Gain Tax Exemption Bonds –Series IX on 1 April 2025 with an issue closing date of 31 March 2026 on a private placement basis. The bond has an issue size of Rs 1,000 crore, with a green option to retain oversubscription. Investors get a coupon/interest payment on 15 October of every year till redemption and the balance along with redemption.
Key Features
- Face Value: Rs 10,000 per bond
- Coupon Rate: 5.25% p.a.
- Nature: Secured, Non-convertible, Non-cumulative, Redeemable & Taxable Bond
- Minimum Application Size: Rs 20,000 (2 bonds)
- Maximum Application Size: Rs 50 lakh (500 bonds)
- Tenure: 5 years from the deemed date of allotment
- Mode: Demat or Physical form
- Bankers to Issue: HDFC Bank, ICICI Bank, State Bank of India, IDBI Bank, Axis Bank, IndusInd Bank, Kotak Mahindra Bank, Yes Bank, Canara Bank, Karnataka Bank, and Federal Bank.
Key Details to Know Before Investing in Capital Gain Bonds
- Resident Indians, Non-Resident Individuals (NRIs) and Hindu Undivided Family (HUF) are eligible to invest in Section 54EC bonds.
- Eligible investors have to invest their LTCG component within 6 months in the capital gain bonds. The 6 months are calculated from the date of the property transfer.
- Investors can claim a tax exemption of a maximum Rs. 50 lakh per financial year.
- The investment in the capital gain bonds would be locked in throughout its 5 year tenure.
- These bonds are not traded in the stock exchanges, i.e., no liquidity. It is issued on a private placement basis.
- The interest income earned from such bonds is taxable. It is taxed as per the investor’s income tax slab.
- No Tax Deduction at Source (TDS) is deducted from the coupon or interest payments.
- The maturity proceeds from the bonds are tax-free.
Taxable Bonds or Non-Convertible Debentures (NCDs)
IRFC issues taxable bonds to raise funds for railway infrastructure. These bonds usually offer higher coupon rates compared to capital gain bonds and tax-free bonds. However, the interest is taxable based on the taxpayer’s income tax slab. Unlike capital gain bonds, taxable bonds are listed on stock exchanges, providing better liquidity.
