There is a new kind of tax saving option is introduced by finance minister this financial year and that is Section 80CCF. Equity savvy investor never liked to invest in Infrastructure bond and to encourage them to take part in Indian growth story and at the same time save some income tax too. According to the proposal, 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.
India Infrastructure Finance Company Ltd (IIFCL) plans to raise Rs 1,200 crores in the last quarter of the current financial year with a greenshoe option to retain over-subscription for issuance of additional infrastructure bonds. The bond issue would come in three tranches of Rs 400 crore each between January and March 2011. 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.
Issue Details :-
Issue Period : January 2011 to March 2011
Rating : “AAA” by ICRA
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 funds 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.
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.
These IIFCL Infra bonds are coming followig IDFC Infra bonds and L&T Infrastructure bonds.Google+