Tax Free Bond form HUDCO (Housing and Urban Development Corporation Ltd

Those who missed the chance to get allotment in earlier tax free bond issues (NHAI, PFC) can apply for the forthcoming tax free bond to be issued by HUDCO. This is an advance intimation, which will enable you to prepare in advance to subscribe for this bond. Interest rates for the bonds are yet to be announced. I assume, the interest rates will be at par with the earlier tax free bonds.

Housing and Urban Development Corporation Limited (HUDCO) was established in 1970 as a wholly owned Government company with the objective to provide long term finance and undertake housing and urban infrastructure development programmers. HUDCO’s sustained performance and profitability earned them Mini-Ratna status conferred in FY 05. HUDCO had sanctioned loans of Rs.. 37,464 cr for housing and Rs. 84,906 cr for urban infrastructure on a cumulative basis up to Dec 2011.The Company has filed Draft Shelf Prospectus with SEBI on 11th January 201 and Issue of Tax Free Bonds expected to be launched by the end January 2012.Salient features of the proposed bond issue

1. The Bonds are issued in the form of tax-free, secured, redeemable, non-convertible Debentures and the interest on the Bonds will not form part of the total income.2. In case of over-subscription; allotment shall be on first cum first serve basis up to the date falling 1 day prior to the date of oversubscription and on proportionate basis on the date of oversubscription, in the manner specified in the Tranche Prospectus.3. CARE has assigned a rating of ‘CARE AA+’ to the Bonds. Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk. Fitch has assigned a rating of ‘Fitch AA+ (ind)’ to the Bonds.4. The bonds are secured by way of floating first pari passu chargeon the present and future receivables of the company to the extent of amount mobilized under the issue. The security cover will be atleast 100% of the outstanding Bonds at any point in time.5. HUDCO shall pay [xx to be announced] % p.a. for Tranche 1 Bonds as interest on the Application amount retained. HUDCO shall also pay [xx to be announced ]% p.a. on refund of application amount. Such interest shall be paid along with the monies liable to be refunded.6. Bonds will be issued in Dematerialised form or physical form as specified by an Applicant in the Application Form. The bonds will be listed on NSE and BSE both and will be available in Demat form facilitating trading of these bonds.7. Investors can pledge or hypothecate these bonds to avail loans.

Tax Benefits1. The income by way of interest on these Bonds shall not form part of total income as per provisions under section 10 (15) (iv) (h) of I.T. Act, 1961;2. There shall be no deduction of tax at source from the interest, which accrues to the bondholders;3. As per provisions under section 2 (29A) of the I.T. Act, read with section 2 (42A) of the I.T. Act, a listed Bond is treated as a long term capital asset if the same is held for more than 12 months immediately preceding the date of its transfer. Under section 112 of the I.T. Act, capital gains arising on the transfer of long term capital assets being listed securities are subject to tax at the rate of 20% of capital gains calculated after reducing indexed cost of acquisition or 10% of capital gains without indexation of the cost of acquisition;

4. Wealth Taxis not levied on investment in Bond under section 2(ea) of the Wealth-tax Act, 1957

Top 10 Home Buying tips

Top 10 Home Buying tips


1. Don’t buy home for short duration stay

If you are planning to buy a home for short duration stay for 2-3 years and if you can't commit to remaining in one place for at least few years, then owning a home is probably not for you. With the registration fees and other transaction costs of buying and selling a home, you may end up losing money if you sell within a short period even a rising real estate market. Suppose, if prices of properties are falling you may end up with huge loss. So before going to buy a house/apartment first decide how long you are going to reside there, if your answer is long term say above 5 years, go ahead and buy the house otherwise drop your idea.

2. Explore the possibility of availing a loan at a competitive rate

Since you most likely will need to get a loan to buy a house, you must make sure that you will be able get the loan as much as required for the full/part payment of the property value. Please note that, the interest rate varies from Bank to Banks and now after NBFCs started competitive rates, you have more choices. In this context, you should also check other fees such as processing fee, documentation fee, and any prepayment penalty associated with the home loan. At the same time do research on the best option that banks offer. Home loan is a huge amount and hence even a difference of 0.5% can make big difference in pay-outs. You should also get the maximum tax benefit from your home loan. See if you can make your spouse as co-applicant and avail the tax benefits. You will simply double the tax benefits if there are two co-applicants.

3. Aim for a home you can really afford.

The rule of thumb is that you can buy housing that runs about 30-40% of your annual salary. But you'll do better to use one of many calculators available online to get a better handle on how your income, debts, and expenses affect what you can afford. This is one of the most crucial decisions. Know the amount of loan you can afford. The banks may sanction loan based on your income but you should look at your monthly expenditure and see if you can afford the maximum that banks offers.

4. If you can't put down the usual 20 percent, you may still qualify for a loan.

There are a variety of public and private lenders who, if you qualify, offer low-interest loans that require a down payment of 10-20% of the value of the property you are planning to buy. In case you are unable to find source to this basic 10-20%, you may have to pay interest at higher rates.

5. Buy in a good location with all basic facilities

The most important part of a real estate piece is location. Even if you have to pay little extra, you should do it. The most important aspect of the right location is future prospect of big construction such as mall, IT Park, company, SEZ, airport, railway lines, or any other commercial space. Apart from this, the points to consider in any location are the following: Availability of civic amenities such as power, water, roads, calm environment, and closeness to main road, markets, shopping malls, schools, and hospitals etc, possibility of renting out your home if required. Good schools located nearby are an added advantage. In most areas, this advice applies even if you don't have school-age children; the reason is that, when it comes time to sell, you will realize that good schools and other basic facilities around are a top priority for many home buyers, thus helping to boost property values.

6. Do your homework before taking the decision

Do your home work before decided to buy a home and to ensure that the home you are planning to buy is suitable for your living at least for the coming 10-15 years and also have enough space to accommodate the expected increases in the number of family members. Also, ensue that the prices you are paying is worth to the facility provided.

7. Avail the service of a professional

Even though the Internet gives buyers unprecedented access to home listings, most new buyers (and many more experienced ones) are better off using a professional agent. Look for an exclusive buyer agent, if possible, who will have your interests at heart and can help you with strategies during the entire process.

8. Select a builder with good track records

Before buying an apartment, please check the credibility of the builder and also make sure that, the builder has delivered all his past projects within the time limit with specified quality. In case you observed any delay or failure form the part of the builder to deliver the project don’t buy apartment from that builder. You have to have long term view of your investment. The property should be stable enough to last 40-50 years so that if you want to sell it and buy another home, you should be able to do it without much hassle. This is where buying from a reputed builder becomes more important. At the same time, explore the possibilities of linking your loan disbursal based on the progress of the construction work instead of pre-determined specified timings.

9. Verification of Legal Documents

Always look for apartments which are pre-approved by the financial institutions. This will one way ensure that, the property title and other documents are verified and approved by the financial institutions and they are supposed to be in order in all respects. Also insist the builder to show you the original title document of the land. For your safety and to ensure that, all documents are in order, you need to engage a lawyer who can search and verify the title and associated documents before you buy the home. You should get everything in writing from the builder. The sale deed should be duly signed by both the buyer and the seller. You should also ensure that lay out plan, building plan, number of floors, and ownership documents are in order and builder has got necessary approval from the concerned Government authorities. You should take legal help from a lawyer if you do not understand any document. Apart from these documents, make sure to get the encumbrance certificates from the sub-registrar. The encumbrance certificate tells you the details of property dealings and other ownership transfer of the property for the last 30 years. All taxes (including land tax and panchayat/municipal/corporation tax) should have been paid on the property. You should get the proof of paying this tax from the builder; also verify the, the NOC certificate from water and electricity authorities.

10. Hire the service of an expert civil engineer

Sure, your lender will require a home appraisal anyway. But that's just the bank's way of determining whether the house/apartment is worth the price you've agreed to pay. Separately, you should hire your own home inspector, preferably an engineer with experience in doing home surveys in the area where you are buying. His or her job will be to point out potential problems that could require costly repairs down the road