Rlys get FM nod for raising tax-free bonds

New Delhi: Facing a fund crunch, Railways will soon issue tax-free bonds to raise around Rs 10,000 crore.

"We have received the notification (clearance) from the Finance Ministry. Based on the notification, we are going ahead for public issue which should materialise by the end of November or beginning of December," Financial Commissioner Pompa Babbar told PTI.

The Finance Ministry has given notification to four organisations, including PFC and Railways, for raising tax- free bonds. The market borrowings of railways is pegged at Rs 20,594 crore in the current fiscal, out of which Rs 10,000 crore is expected to be raised through tax-free bonds by Indian Railway Finance Corporation for financing select capacity enhancement work.

Babbar, however, said the amount to be raised through tax-free bonds depends upon market conditions. "A lot depends on the market appetite…the financial condition of the market. There are lots of ups and downs in the market. But we hope for the best", Babbar said.

Railways has also got temporary relief on account of service tax on freight services.
"The service tax on freight has been kept at abeyance till December 31 and we have got the letter from the Finance Ministry to this effect. But the tax relief on the auxiliary services is yet to come and we are fighting for it", the official said.