Infrastructure bonds are tax savings bonds issued by corporations related with the Government of India. Recently, the government of India granted approval to Life insurance Corporation (Lic), market Finance Corporation of India (Ifci) and Infrastructure amelioration Finance firm (Idfc) to issue infrastructure bonds.
Industrial Finance Corporation of India (Ifci) is the first to come out with an issue providing 7.85 - 7.95 returns. You can whether opt for cumulative interest (interest paid on maturity) or each year interest. Minimum speculation estimate - Rs 5000. Tenure of speculation -10 years, with or without buyback option after five years.
2010 Tax Brackets
Tax benefits on Infrastructure bonds
The maximum deduction allowed under Section 80Ccf for this speculation is Rs 20,000 each year. This is apart from the deductions of Rs 1 lakh which is allowed under section 80C of the wage tax act for the financial year 2010 - 2011. Gains from the these bonds will be liable for capital gains tax which can be 10% or 20% with indexation benefits.
How much can I save by investing in Infrastructure Bonds?
This will affect individuals on different tax slabs as follows -
10% tax bracket (income between Rs 1.65 - 5 lakh), can save Rs 2060
20% tax bracket (income between Rs 5 - 8 lakh), can save Rs 4000
30% tax bracket (income more than 8 lakh), can save Rs 6180
Investment rationale
First and leading point is tax benefit. Individuals across various tax brackets should invest and make use of the further deduction. Secondly as the interest rate is likely to inch further, the returns from this speculation will become inviting vis--vis other products.
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