Govt. of India has allowed certain Infrastructure companies to issue Long Term Tax Saving Infrastructure Bonds. These companies include IDFC, IFCI, REC, IIFCL, L and T, ICICI etc. Investors of these Infra Bonds can claim tax exemption under section 80 CCF of the Income Tax Act, 1961 for an amount up to Rs. 20000. This deduction is aver and above Rs. 100000 limit available under sections 80C, 80CCC and 80CCD read with section 80CCE. Most of the companies have issued notifications for the issue of bonds with interest rates ranging from 7.75 percent to 8.30 percent. There are various options for investors such as buy back by the company after 5 / 7 years and maturity option after 10 / 15 years under different series of Bonds. Several companies have announced Infra Bonds Schemes for 2012-2013.
These Infra bonds provide tax benefits apart from creating additional value by the time of maturity. Though the companies are not promising any assured returns, one can expect minimum returns on par with any saving schemes as the the sector will get highest priority by the Governments. These Infra Bonds are most effective in the case of high salaried people with 30 percent tax bracket. Following are these details of Long Term Infra Bonds for the year 2011-12.
1. REC Long Term Infra Bonds: Issue Last date: March 2012; Interest Rate: 8 percent for buyback option and 8.10 percent for Non-Buy back option. Website: recindia.nic.in
2. IIFCL Infra Bonds: Issue Closes on March 2012. Interest: 8.15 for buy back and 8.30 for till the maturity option. Website: www.iifcl.org
3. IDFC Infrastructure Bonds: Issued series I and Series II with an intereste rate of 8 percent for both Buy back and cumulative options. Website: www.idfc.com
4. IFCI Long Term Infra Bonds: The IFCI has issued Series I and Series II Bonds with an interest rates of 8 percent for Buy Back option and 8.25 for Non Buy Back option. Website: www.ifciltd.com
5. L and T Infra Bonds: Issued Long Term Tax Saver Infra Bonds with 7.5 percent interest rate for buy back after 5 years and 7.75 percent interest for buy back option after 7 years. Website: www.ltinfrabond.com
Other companies and Bank such as ICICI, LIC and SBI are also likely to issue Long Term Infra Bonds soon. Power Finance Corporation and SREI Holdings have released Infra Bonds recently and the subscriptions is under progress.