Save Tax and Earn Returns – Infrastructure Bonds
A rupee saved is a rupee earned. Proper tax planning ensures that you make the most of your hard earned money and improve your lives.
In Budget 2010 the finance minister had announced a new deduction (Sec 80CCF) of Rs 20,000 for investment in special infrastructure related bonds. This newly announced deduction is over and above the Rs 1 lakh Sec 80C deduction.
What does it mean? It means that if you invest upto Rs 20,000 in infrastructure bonds, this amount is tax exempt and is not added in your taxable income regardless of your income level and tax bracket. So you get the dual benefit of not only saving tax but you earn an attractive fixed return on this investment.
What is the investment tenure of these Bonds? The term of the bond is 10 years but they come with an option to exit after five and seven years. So the minimum lock-in is five years after which the investor may exit either through the secondary market or through a buyback facility provided by the issuer.
What is the rate of interest offered? The interest rate varies from company to company but is normally in the range of 8.5-is 9.15% per annum (pa) and you may choose either the regular interest or the cumulative option.
How much can one invest? The minimum application amount is Rs 5,000. Though one may invest an additional amount, the tax deduction would be applicable only to the extent of Rs 20,000.
Are they safe? Most of the 80CCF Infrastructure Bonds are rated by credit rating agencies like CARE or ICRA that gives an indication of the safety of investment in these bonds. While some of these bonds are issued by the Government of India companies that gives an assurance on the creditworthiness and safety on part of repayment.
Open Infrastructure Bonds Issues:
Issue Name Application Download
Invest via Rajiv Gandhi Equity Savings Scheme (RGESS)