ICICI Bank Bonds FAQs

What is a Bond?


A Bond is a debt instrument where the issuer of the Bond agrees to repay the investor, the amount borrowed and interest, over a specified period of time.

How are Bonds different from Fixed Deposits?


Bonds are similar to Fixed Deposits. Like Bonds, fixed deposit receipts are normally issued by a bank, a financial institution or a company, for a fixed period. A specified rate of interest is payable to the investor at regular intervals. However, unlike Bonds, Fixed Deposits are not transferable. Also, while Bonds may be secured or unsecured, Fixed Deposits are always unsecured.

Tax Saving Bond


A Tax Saving Bond is a bond, the proceeds of which are to be deployed in accordance with the Income Tax Act, 1961 in infrastructure projects. The greatest attraction of it is the tax rebate available under Section 88 of the Income Tax Act, 1961 in the year in which the amount is invested. Tax saving bond can either pay you interest regularly (which can be annual or half yearly or quarterly or monthly) or it can be in the nature of deep discount bond.

Regular Income Bond


A Regular Income Bond is a bond, which pays you interest regularly say, annually, half-yearly etc.. It is designed to meet the needs of people who want regular income. Subscription to the same does not entitle you to the tax rebate under Section 88 of the Income Tax Act.

Deep Discount Bond


A Deep Discount Bond is a Bond, which is sold at an issue price, which is substantially below its face value. It is repaid on the maturity date at the face value. The difference between the face value and the issue price represents income on the investment. These Bonds are also called Zero Coupon Bonds or Money Multiplier Bonds.

Face Value of a Bond


The face value of a Bond is the amount that the issuer agrees to repay the bondholder at maturity date. This amount is also sometimes referred to as par value, maturity value, redemption value or principal value.

Issue Price


Issue price of a Bond is the price at which the Bond is originally issued by the issuer to the investors.

Tenure of a Bond


The tenure of a Bond is the time period between the date of issue and the date of maturity.

Maturity date


The date on which the principal is required to be repaid is known as the maturity date.

Coupon Rate of a Bond


The coupon rate is the interest rate that the issuer agrees to pay each year. The coupon rate multiplied by the face value of the Bond gives the Rupee amount of the coupon. For example, if an investor purchases a Bond of face value Rs.5,000/- having a coupon rate of 7% payable annually, then the investor will receive Rs.350 each year as interest or coupon throughout the tenure of the Bond.

Bond Certificate


A Bond Certificate is a certificate, which establishes the title of the Bondholder to the Bonds specified therein.

Consolidated Bond Certificates


An investor opting for a consolidated certificate will receive one certificate for the total number of Bonds invested in.

Market Lot


Market lot is the minimum number of Bonds that can be traded on the stock exchange.

Deemed Date of Allotment


The Deemed Date of Allotment is typically fixed as 30 days from the date of closure of the Issue or date of utilisation of proceeds, whichever is earlier. All benefits relating to the Bonds will be available to the investors from the Deemed Date of Allotment. The actual allotment may occur on a date other than the Deemed Date of Allotment. No interest on application money will be paid to any investor till the Deemed Date of Allotment.

What is the concept of Tax Deducted at Source (TDS) in respect of interest on Bonds?


As per the current provisions of Income-tax Act, 1961, (Act) , Tax Deduction at Source (TDS) is deducted on interest on Bonds where interest paid or payable to a resident individual / HUF bondholder exceeds Rs.5,000/- in a financial year. In case of all non-resident bondholders, tax will be deducted at source on interest at the rates as per prevailing Income-tax Act, 1961, or Double Taxation Avoidance Agreement, whichever is lower, subject to submission of relevant documents and fulfillment of conditions as may be amended from time to time. Certain specified entities whose income is unconditionally exempt under section 10 of the Act and who are statutorily not required to file return of income as per section 139 of the Act, CBDT has vide Circular no.4/2002 dated July 16, 2002, granted blanket TDS exemption. Alternatively, valid certificate under section 197 issued by your Assessing Officer can be submitted within the prescribed time frame for availing the benefit of lower or nil rate of TDS.

What should I do if I hold ICICI Bank Bonds and I am not liable to pay tax and TDS is not required to be deducted?


To avail the benefit of deduction of tax at source at Nil/lower rate, you may submit any of the following documentation:

 

(a) Certificate from the Indian tax authorities.

 

(b) Certificate under section 197 of the Act issued by the Assessing Officer for nil / concessional rate of TDS can be submitted by any bondholder including companies and firms. The certificate should be submitted by the bondholder to 3i Infotech.

 

(c) Form 15G: If you are a resident person/HUF (other than a company, Co-operative society or a firm), you can submit Form 15G in duplicate to the registrar/company. As per the provisions of section 197A of the Act, Form 15G can be submitted provided the tax on your estimated total income for the financial year computed in accordance with the provisions of the Act is NIL ) and the interest paid or payable to you does not exceed the maximum amount which is not chargeable to tax.

 

(d) Form 15H: If you are a senior citizen, i.e. if you are of the age of 60 years and above at any point of time during the financial year, you can submit Form 15H. As per the provisions of section 197A of the Act, Form 15H can be submitted provided the tax on your estimated total income for the financial year computed in accordance with the provisions of the Act is NIL ) and the interest paid or payable to you does not exceed the maximum amount which is not chargeable to tax.

 

(e) Entities exempt from tax as per CBDT Circular: Certain specified entities whose income is unconditionally exempt under section 10 of the Act and who are statutorily not required to file return of income as per section 139 of the Act, CBDT has vide Circular no.4/2002 dated July 16, 2002, granted blanket TDS exemption. Some examples of the specified entities are provident funds, gratuity funds, local authority, hospitals exempt under section 10(23C)(iiiac), educational institutions or university exempt under section 10(23C)(iiiab).

 

(f) Exemption for insurance companies: Certain entities such as Life Insurance Corporation of India, General insurance Corporation of India along with its four subsidiaries or any other insurer are eligible to receive interest on securities without deduction of tax at source, if such securities are owned by them or it has full beneficial interest in the same.

When and how do I obtain the TDS certificates?


Form 16A is issued by Traces (Income Tax Dept) based on the quarterly eTDS returns filed by ICICI Bank and subsequently downloaded & despatched to the investors by ICICI Bank / 3i Infotech Limited.

Where can I obtain the Form 15G/15H from? When is it required to be submitted?


ICICI Bank as an investor friendly measure sends Form 15G to the ICICI Bank Bond investors. In case the investor does not receive the same, he can write to 3i Infotech Limited at International Infotech Park, Tower # 5, 3rd Floor, Vashi Station Complex, Vashi, Navi Mumbai, Mumbai 400 703.

 

You will have to send Form 15G/Form 15H duly filled in to 3i Infotech Limited at the above address at least one month prior to the Interest/Redemption payment date. Form 15G/15H is required to be submitted every financial year.

What are the tax implications on Deep Discount Bonds (DDBs)?


The tax treatment of DDBs will be in accordance with and subject to the conditions in the CBDT clarification F. No. 149/235/2001-TPL dated February 15, 2002 which are given in brief as under:
(a) Every bondholder will have to offer to tax the difference between the market valuation made in accordance with the guidelines issued by RBI as on two successive valuation dates (i.e. March 31 each financial year) as interest income (where the bonds are held as investment) or business income (where the bonds are held as trading asset). For this purpose, market values of different instruments declared by the RBI or by the Primary Dealers Association of India jointly with the Fixed Income Money Market and Derivatives Association of India may be referred to. In a case where the bond is acquired during the year, the difference between the market value as on the valuation date and the acquisition cost, will be taxed as income.

(b) On transfer of bond before maturity, the difference between the sale price and the cost will be taxable as short-term capital gains or business income, as the case may be. For computing such gains, the cost of the bonds will be taken to be the cost of acquisition plus the income offered to tax in the earlier years as explained in clause (a) above.

(c) In case of redemption, the difference between the redemption price and the value as on the last valuation date immediately preceding the maturity date will be taxed as income.
In case of an intermediate purchaser, the difference between the redemption price and cost of bond will be taxable as income. For this purposes, the cost of the bond will be taken to be the cost of acquisition plus the income offered to tax in the earlier years as explained in clause (a) above.

(d) A non-corporate investor holding DDBs upto an aggregate face value of Rs.1 lakh may opt to offer income for tax in accordance with earlier CBDT clarification dated March 12, 1996. The clarification states that the difference between the redemption price and subscription price would be treated as interest income assessable under the Income-tax Act in the year of maturity. It further states that on transfer of bonds before maturity, the difference between the sale price and issue price will be treated as capital loss/gains if held by the assessee as investments or as trading profit/loss if the assessee dealt in purchase of sale of bonds, securities, etc.

(e) The difference between the issue price and redemption price will be subject to tax deduction at source under section 193 of the Income-tax Act in the year of maturity.

What is the procedure for redemption of bonds?


For bonds held in physical form, the bondholders are required to surrender the bond certificates duly discharged by the sole holder/ all the joint holders at least one month prior to the redemption date. ICICI Bank may however redeem the bonds without requiring the surrender of bond certificates. In such a case, the redemption proceeds would be paid to those bondholders whose names appear in the Register of Bondholders as on the record date fixed for this purpose.

In case of bonds held in electronic form, no action is required on part of the Bondholders and the redemption proceeds would be paid to those bondholders whose names appear on the list of beneficial owners given by the Depositories to the Company. Presently, ICICI Bank has obtained the necessary approval for despatch of the redemption proceeds without requiring the surrender of the original bond certificates by the bondholders. The redemption warrants are dispatched to the investors on or before the due date of payment to the address recorded with us.

However, the necessary redemption forms (intimation of redemption) are sent to the investor informing them the redemption procedure.

What information should I provide in a correspondence to ICICI Bank to facilitate a quick response to my queries?


Kindly provide the following information to facilitate a quick response:

  • Name and Address of bondholder.
  • Bond Certificate Number.
  • Distinctive Number
  • Folio Number
  • Issue Details (year-month of issue, etc.)
 

All these details are available on the Bond Certificate.

How to change the address / bank details / bank mandate on record ?


A request letter {mentioning the new address/ bank details i.e. name of the bank, branch, account no., ( complete address of your banker in case of bank mandate) and bondholder number } duly signed by the first holder together with supporting documents i.e. Address proof for change of address and blank cancelled cheque or copy of same for change in bank details  is to be sent to the address given below.

 

Address for correspondence:

 

3i Infotech Limited
Unit : ICICI Bank Limited
Tower No 5, 3rd Floor,
International Infotech Park,
Vashi Station Complex,
Vashi, Navi Mumbai - 400 703

When are the warrants are usually dispatched ?


The interest / redemption warrants are normally dispatched 3-4 days prior to the due date of payment

What is the communication address where the queries/ change in the address/ bank details can be sent ?


3i Infotech Limited
Unit : ICICI Bank Limited
Tower No 5, 3rd Floor,
International Infotech Park,
Vashi Station Complex,
Vashi, Navi Mumbai - 400 703

Where can I email my queries relating to ICICI Bank Bonds ?


All emails pertaining to ICICI Bank Bonds should be marked to investor@icicibank.com

Service Request Forms