Investment Avenues | srei

Investment Avenues

The modes of investment available to trusts as per Section 11(5) of Income Tax Act 1961 are:

  • Investment in savings certificates issued by the Central Government, Post Office Savings Bank; scheduled bank or a co-operative society engaged in carrying on the business of banking.
  • Investment in units of the Unit Trust of India established under the Unit Trust of India Act, 1963.
  • In debentures issued by, or on behalf of, any company or corporation in which both the principal and the interest are fully and unconditionally guaranteed by the Central Government or by a State Government.
  • Deposit in any public sector company or in any bonds issued by a financial corporation which is engaged in providing long-term finance for industrial development in India.
  • Bonds issued by a public company in India carrying on the business of providing long-term finance for urban infrastructure and residential houses in India.
  • Investment in immovable property.
  • In units issued under any scheme of mutual funds.
  • Any transfer of deposits to the Public Account of India.
  • Investments in the equity shares of a depository or in the equity share capital of a company.
  • In the shares of National Skill Development Corporation.
  • Investment in debt instruments issued by any Infrastructure Finance Company (IFC) registered with the Reserve Bank of India.

Products available from Srei Infrastructure Finance:

  • Non-convertible Debentures (NCDs)
  • Commercial Paper (CPs)

The benefits of investing in NCDs of an Infrastructure Finance Company (IFC) like Srei Infrastructure Finance are:

  • Tax Benefit: For charitable and religious trusts in India, investment in NCDs / debts of IFCs qualifies for mode of investment under Section 11(5) of I.T. Act 1961.
  • Better Returns: NCDs in the past have offered interest rates which were quite attractive as compared to interest on other fixed-income options.
  • No Tax deduction at source: Unlike bank FDs or corporate FDs, there is no tax deduction at source (TDS) on NCDs offered in DMAT mode and listed on a stock exchange as per section 193 of the I.T. Act. Income tax if any on the interest income will have to be paid at the time of declaring one's income.
  • Higher Safety: Unlike corporate FDs which are unsecured, NCD issues by NBFCs are secured debt which essentially means that NCD's are 100% secured by assets of the company. NCDs are also rated by credit rating agencies, which indicate the degree of safety regarding timely servicing of financial obligations.
  • Good Liquidity: NCDs offer good liquidity due to Stock Exchange listing and can be traded in the market (however listing does not guarantee liquidity). One could prematurely exit by either selling on the stock exchange if a buyer is available or exercise a put option if available.
  • Payout Options: Most NCDs have payout options like monthly, quarterly, annual and cumulative interest, which can provide periodic income.
  • Wide Choices: The tenure of NCDs can be anywhere between 1 year and 20 years. Hence, you could chose to invest in NCDs as per your requirement.