The infrastructure bonds are the best option to save tax. The Government of India allowed following finance companies to issue these infrastructure bonds :
1) Life Insurance Corporation (LIC)
2) Industrial Finance Corporation of India (IFCI)
3) Infrastructure Development Finance Company (IDFC)
The infrastructure bonds get a deduction up to Rs 20,000 under the section 80CCF. This deduction allowed is besides the deduction of Rs. 1 lakh allowed under section 80C. The individual with an income slab upto Rs. 5 lakh can save tax upto Rs. 2060/-; those with income slab upto Rs. 8 lakhs can save tax upto Rs. 4000/- and those with an income slab more than Rs. 8 lakh can save a tax upto Rs. 6180/-.
The SREI Tax Saving Infra Bond issued under 80CCF Infrastructure Bonds are issued by SREI Infrastructure Finance. The public issue announced by the company is a long term infrastructure bond. The face value of the bond is Rs. 1000/-. They are in the form of secured redeemable non-convertible debentures. They are to be issued in parts and should not exceed 500 crores for the fiscal year 2011-12. These bonds have exemption under 80CCF of the Income tax act, 1961.
The SREI tax saving Infra Bonds has been kept open for subscription form December 31, 2011. The issue closes on the 31st January, 2012 or earlier depending upon the decision of the Board of Directors. The bonds issued in the tranche 1 have been issued for an amount not exceeding Rs. 300 crores. The Board of Directors has decided to list these bonds on the Bombay Stock Exchange. The Infra Bonds have been rated by CARE AA. The rating by CARE AA refers that these bonds are of high safety in reference to the financial obligations of the company.
The issue of the SREI Tax Saving Infra Bonds is to be issued in one or more tranches. The issue amount should not exceed the shelf limit. The minimum number of bonds an applicant can issue is 1 bond and for the Hindu Undivided Family it is in the multiples of 1. The applicant can apply for the tranche 1 bond in the same series or a different series. The allotment of these tranche 1 bonds is in a dematerialized form. The applicant has the flexibility to keep these bonds either in physical form or a dematerialized form. The bonds are available in four series with varied interest rates.
- Series 1 and Series 2 – 8.90% per annul.
- Series 3 and Series 4 – 9.15% per annul.
The interest for the bonds in Series 1 and 3 will be paid to the applicant on annual basis; while the interest for the series 2 and 4 will be paid on a cumulative basis to the applicant. The company has decided to keep a buy back option for all the series of Infra bonds. The maturity period of the bonds varies from 10-15 years and the lock in period is for 5 years.
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