Infrastructure Development Finance Company (IDFC), an integrated infrastructure finance company, has launched infrastructure bonds, giving a tax deduction of up to Rs 20,000 under Section 80CCF. The tax deduction will be above Rs 1,00,000 under Sections 80C, 80CC and 80CCD.
The bond has four investment options with five-year lock-in periods and maturity of 10 years. Each bond comes with a face value of Rs 5,000 and and one can apply for a minimum of two bonds and in multiples of one bond thereafter. Series 1 carries 8% coupon, pay-able annually. The second series is a cumulative one with 8% coupon and compounded annually. The 3rd series carries 7.5% coupon and is payable annually with a buyback option. Series 4 is a cumulative option with 7.5% coupon compounded annually and with a buyback option. The issue opened on September 30 and will close on October 18, 2010.
An investor needs a PAN number and a demat account number to invest and the bonds cannot be pledged for loans during the lock-in period. The bonds are proposed to be listed on the NSE and the BSE and are subject to statutory lock-in for five years from the date of allotment and no trading will be permitted during the lock-in period.
An investor in the highest tax bracket of 30% can save an extra Rs 6,000 by investing in infrastructure bonds. Those in the lower tax bracket can save Rs 2,000 and these bonds offer investors the stability of fixed returns and the safety of capital. According to the government’s norms, infrastructure bonds are to be issued by LIC, IDFC and IFCI and non-banking infrastructure finance companies recognised by RBI.
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