09-12-2018, 12:21 PM
Pune Municipal Corporation raised Rs 200 crore by issuing 10-year municipal bonds.
The money raised from the bonds will go towards infrastructure projects for the city. Next in line are municipal bonds for New Delhi and Ahmedabad. Like any other bond, municipal bonds are debt instruments—a promise to repay a fixed principal amount with interest periodically, which can be paid at fixed intervals or at the end of the tenure, with the principal. For instance, the coupon rate for Pune municipal bonds was 7.50% semi-annual. In the case of the Pune municipal bonds, the money collected will be used to provide uninterrupted municipal water supply in the city.
The Government of India allowed ULBs to issue tax-free municipal bonds in 1999-00 and has amended the Income Tax Act (1961 vide the Finance Act 2000) inserting a new clause (vii) in Section 10(15), whereby interest income from bonds issued by local authorities was exempted from income tax. The GOI issued guidelines for issue of tax-free municipal bonds in February 2001. It has been clearly specified that the funds raised from these tax-free municipal bonds are to be used only for capital investments in urban infrastructure like potable water supply, sewerage or sanitation, drainage, solid waste management, roads, bridges and flyovers; and urban transport.
The money raised from the bonds will go towards infrastructure projects for the city. Next in line are municipal bonds for New Delhi and Ahmedabad. Like any other bond, municipal bonds are debt instruments—a promise to repay a fixed principal amount with interest periodically, which can be paid at fixed intervals or at the end of the tenure, with the principal. For instance, the coupon rate for Pune municipal bonds was 7.50% semi-annual. In the case of the Pune municipal bonds, the money collected will be used to provide uninterrupted municipal water supply in the city.
The Government of India allowed ULBs to issue tax-free municipal bonds in 1999-00 and has amended the Income Tax Act (1961 vide the Finance Act 2000) inserting a new clause (vii) in Section 10(15), whereby interest income from bonds issued by local authorities was exempted from income tax. The GOI issued guidelines for issue of tax-free municipal bonds in February 2001. It has been clearly specified that the funds raised from these tax-free municipal bonds are to be used only for capital investments in urban infrastructure like potable water supply, sewerage or sanitation, drainage, solid waste management, roads, bridges and flyovers; and urban transport.