India Infrastructure Finance Company (IIFCL) has come up with its first series of infrastructure bonds. You can invest upto 20,000 under infrastructure bonds to get tax benefits under section 80CCF. This is in addition to the 1 lakh limit available under Section 80C, 80CCC and Section 80CCD.
THE PRODUCT
There are two options here. You can opt for a 10-year bond or a 15-year bond. The face value of each bond is 1,000 and you need to subscribe to a minimum of five bonds and in multiples of one bond thereafter. You can even subscribe using a combination of 10-year and 15-year bonds. For example, you can apply for 10 bonds of 10-year period and 10 bonds of the 15-year period. While the coupon rate for the 10-year bond is 8.15%, the coupon rate for the 15-year bond is pegged slightly higher at 8.3% per annum. You could choose to receive interest on an annual or a cumulative basis. Both of them have a buyback option. The 10-year bond has a buyback option at the end of five years, while the 15-year bond has a buyback at the end of seven years. In addition, after the initial lock-in of five years, the bonds will be listed on BSE. The issue closes on March 4, 2011.
WHO SHOULD APPLY
The maximum amount of income not chargeable to tax in case of individuals (other than women assesses and senior citizens) and HUFs is 160,000. In the case of women assesses, it is 190,000 and in case of senior citizens, it is 240,000 for financial year 2009-10. Hence, those whose income exceeds these slabs could apply. Thus, by investing 20,000, a person who is in the highest tax bracket of 30.9% can save upto 6,180, while those in 20.6% tax bracket, can save 4,120, and those in the 10.3% tax bracket, can save 2,060.
WHY TO APPLY
This limit of 20,000 per annum is in addition to Section 80C, 80CCC and 80CCD. IIFL is a governmentowned organisation.
WHY NOT TO APPLY
The bonds are locked in for a period of five years, so there is no exit in case you need the money mid way.
National Savings Certificate Here's everything you need to know about the 5-year savings scheme offered by the Government This is a 5-year small savings scheme of the government. From 1 July 2016, a National Savings Certificate (NSC) can be held in the electronic mode too. Physical pre-printed NSC certificates have been discontinued and replaced with Public Provident Fund-like passbooks. What's on offer The minimum amount you can invest in them is Rs100 and there is no upper limit. Under this scheme, all deposits up to Rs1.5 lakh qualify for deduction under section 80C of the Income-tax Act, 1961. The interest earned is taxable. You can invest in multiples of Rs 100. These certificates can be owned individually, jointly and also on behalf of minors. The interest rates for all small savings schemes are released on a quarterly basis. The effective rate for NSC from 1 October to 31 December is 8%. The interest is calculated on an annual compounding basis and is given along w...
