IIFCL Infrastructure Bonds opens on 4th Feb 2011

by khalid on 07/02/2011 · 7 comments

India Infrastructure Finance Company Ltd (IIFCL) plans to raise Rs 1,200 crores through the Tax Saving Long Term Infra Bonds under Section 80 CCF from 4th Feb 2011 to 4th Mar 2011 with a greenshoe option to retain over-subscription for issuance of additional infrastructure bonds. The bond issue would come in one or more tranches in this financial year. The bonds carry a interest rate of 8.15 per cent for 10 years and 8.30 per cent for the 15-year series. There is a lock-in period of 5 years from the date of allotment. These IIFCL bond has a triple A rating like earlier IDFC bond, which had a triple A rating but L&T bond had AA+ rating.

As per section 80CCF of income tax, an individuals can invest up to Rs 20,000 in these bonds in addition to the Rs 1 lakh limit available under Sections 80C, 80CCC and 80CCD such as life insurance premium, provident fund, PPF and National Savings Certificate.

There are 2 investment options are available for these IIFCL Infra Bonds.
Option 1. Matuarity period for this is 10 years and interest can be have annually or cumulative at the rate of 8.15% p.a.
Option 2. Matuarity period for this is 15 years and interest can be have annually or cumulative at the rate of 8.30% p.a.

Issue Details :-
Issue Period : 4th February 2011 to 4th March 2011
Rating : “AAA” by ICRA and CRISIL
Issue Size : Rs 1,200 crore
Face Value : Rs 1000 per Bond
Subscription Amount : Minimum 5 bonds
Lock-in Period : 5 years
Listing : NSE/BSE

The Issue proceeds raised through these bonds will be utilised towards “infrastructure lending” as defined by the RBI in the regulations issued by it from time to time, after meeting the expenditures of, and related to the issue. These infrastructure bond issues are part of the government’s effort to mobilise money to part-fund the massive $1-trillion infrastructure spend it has planned for the Twelfth Plan.

Tax Benefits :- Under section 80CCF of the Income Tax Act, Rs 20,000 per annum paid or deposited as subscription to long term infrastructure bonds shall be deducted in computing the taxable income. This is over and above Rs 1,00,000 tax benefit available under section 80C, 80CCC and 80CCD.

Benefits as per Tax slabs :-
1. Slab 10.3% : Rs 2,060
2. Slab 20.6% : Rs 4,180
3. Slab 30.9% : Rs 6,180

Pros:- The limit of Rs 20,000 per annum is in addition to Sections 80C, 80CCC and 80CCD. Hence, it is advisable to consider applying in this issue.
Cons:- The bonds are locked in for five years, so there is no exit in case you need the money midway which restricts liquidity.

These IIFCL Infra bonds are coming followig IDFC Infra bonds.

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{ 7 comments… read them below or add one }

B.N.Posa February 10, 2011

Sirs,
Please let me know where I can get application forms and the Banks that accept these payments.
With regards,
B.N.Posa

Reply

Duresh February 15, 2011

how may i buy iifcl bond ?

Reply

Chirag February 15, 2011

To invest in these bonds you may contact Harish +91 9920328954

Reply

hbdas February 16, 2011

how and where i can buy these bonds. i am staying at bhubaneswar,orissa.

Reply

khalid February 16, 2011

Hi hbdas,

You just go to the nearest branch of any of following banks for applying in IIFCL Infrastructure Bonds.

Axis Bank Ltd. HDFC Bank Ltd.
IDBI Bank Ltd. Kotak Mahindra Bank Ltd.
ICICI Bank Ltd.

Or you may contact Harish +91 9920328954 who is in Mumbai but he will help you.

Hope it will help, thanks for dropping by.

Reply

BHANDARI CHETAN February 28, 2011

Sir,
Let me know why there is restriction on Subscription Limit of Rs.20,000/- (IIFCL Infra Bonds) for single candidate. If you want to raise 1,200 crores from Infra Bonds why you are given restriction on Infra Bonds Subscription.

Though there is benefit of Government from both the side.
1) If there is no restriction on subscription limit then Govt. can able to raise their estimated targeted funds as early as they can at very cheap rate of interest @8.30% p.a.

2) Indirectly they are getting the Direct Tax amount before due date. Which they can use without any rate of interest on such advance tax.

Hope for your positive & quick reply in this regards.

Reply

khalid February 28, 2011

Hi Chetan,
This Rs 20,000 limit is not only for IIFCL Infra Bonds but all ifra bonds launched from various companies. This limit is due to the Income Tax section 80CCF.
I think individual can invest more than Rs 20,000 but income tax benefit is allowed only for Rs 20,000.
Hope it is clear now, thanks for your visit.
regards,
khalid

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