Tax-free bonds give better returns than tax-saving FDs

Tax-free bond issues are witnessing record subscription. In the latest development, National Highways Authority of India (NHAI)’s Rs 10,000-crore issue was subscribed 2.4 times. Investors had similarly lapped up earlier ones by NTPC, IRFC and Power Finance Corporation.

Investment advisors and financial planners say investors are choosing these issues over bank fixed deposits (FD) for the attractive after-tax returns that Tax-free bonds offer. “We are in a downward interest rate cycle. The returns on fixed deposit can go down further, and so investors are looking at these issues to lock in their investments at the current rates,” says Suresh Sadagopan, founder, Ladder 7 Financial Advisors.

It’s not only the higher post-tax returns that are attracting investors to these bonds. These bonds are issued by the government-backed companies that guarantees safety of capital, says Malhar Majumder, partner and consultant at Positive Vibes Consulting and Advisory. Read More.

Govt eyes annual savings of Rs 300 crore from removal of LPG subsidy

The government’s latest decision to cut subsidised cooking gas sales to consumers with an annual taxable income of above Rs 10 lakh is likely to translate into annual Liquefied Petroleum Gas (LPG) subsidy savings of Rs 300 crore, according to the oil ministry.

This is in addition to savings from the elimination of duplicate or fake connections as a result of implementation of the direct benefit transfer for LPG (DBTL) scheme — Rs 14,600 crore in FY15 — and additional savings of around Rs 2,000 crore through the GiveitUp campaign under which 5.7 million consumers have voluntarily surrendered their subsidy so far.

“According to our estimates, there are two million consumers in the Rs 10 lakh-plus slab (of taxable income). Some of these are already covered under GiveitUp. We are estimating savings of roughly Rs 300 crore per annum,” said a senior