Shares of Indian Renewable Energy Development Agency (IREDA) And Housing and Urban Development Corporation (HUDCO) Stock markets rose sharply on Wednesday amid reports that the government is considering taking steps to help public sector companies access funds more easily.
What happened: The Union Budget is set to introduce measures to ensure affordable funding for IREDA and HUDCO. Narendra Modi The government aims to promote renewable energy and affordable housing, Moneycontrol quoted a government official as saying.
The government plans to include IREDA and HUDCO under Section 54EC of the Income Tax Act. The official said the move will provide capital gains tax exemption to investors buying bonds, which will lead to lower interest rates than the current bond market.
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Currently, section 54EC of the Income Tax Act allows tax exemption on long-term capital gains from sale of immovable assets when invested in specified public sector undertakings, such as. Rural Electrification Corporation (REC) And Power Finance Corp (PFC)Inclusion of IREDA and HUDCO under this section will provide similar tax benefits, making it an attractive option for investors despite low interest rates.
Currently these bonds offer an interest rate of 5.25% per annum, while the interest rate in the bond market for Public Sector Undertaking (PSU) bonds is over 8%.
Investment in these bonds must be made within six months of selling the immovable property and must be held for at least five years. The finance ministry is reportedly finalising the details, but no legislative changes are required, only an official notification is needed.
Price Action: On Wednesday afternoon, IREDA shares rose 4.6% to Rs 193.55, while HUDCO share price rose 3.09% to Rs 283.65.
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