Infrastructure Development Finance Company Ltd (IDFC) has informed the share market (BSE/NSE) that the Committee of Directors, at its meeting held on 4th January 2011 have decided to float its second batch of tax-saving infrastructure bonds on 17th January 2011 and these bonds will be available for subscription upto 4th February 2011.
These bonds are long term infrastructure bonds of face value of Rs 5,000 each, in the nature of secured, redeemable, non-convertible debentures, having benefits under Section 80 CCF of the income Tax Act, 1961. The company aims to mop up Rs 2929 crore through these long-term bonds at the peak of the tax-saving season. Earlier IDFC raised Rs 436 crore from the first issue , which closed on 25th October 2010.
According to the Section 80 CCF of the income Tax, 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.
The maximum amount of income not chargeable to tax in case of individuals (other than women assesses and senior citizens) and HUFs is Rs 1,60,000. In the case of women, the limit is Rs 1,90, 000 and in the case of senior citizens, it is Rs 2,40,000 for FY10. Hence those guys whose income exceeds these slabs can go for these bonds.
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.