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L&T Infra Bonds Tranche 1 - The issue closes for subscription on 24 December 2011

Investors looking for tax-saving options under Section 80CCF have one more option: L&T Infrastructure Bonds. Infrastructure bonds were introduced in 2010 to give a boost to the infrastructure segment as well as provide an opportunity for individual tax payers to reduce their tax liability. Investors can invest up to . 20,000 in such bonds and avail of tax benefits. The issue closes for subscription on December 24.


The face value of each bond is . 1,000. Investors can apply for a minimum of five bonds and in multiples of one bond thereafter. Investors can subscribe to these bonds in either the physical or demat form. There are two series on offer. In Series 1, the interest rate is 9% payable annually, while in Series 2, the interest rate is 9% but compounded annually payable at the end of maturity. The maturity is 10 years from the deemed date of allotment. The bonds will be locked in for five years from the date of allotment. The issuer offeres bondholders three exit options: buybacks after five years, or seven years, and 10 years which is at the time of redemption. In addition, once the lock-in period of five years is over, the bonds shall be listed on the BSE.


An investment of . 20,000 would fetch a tax exemption of . 2,060 (if your tax rate is 10.3%), . 4,120 (if your tax rate is 20.6%) and . 6,180 (if your tax rate is 30.9%) maximum.


L&T Infrastructure Finance Company, the issuer of the bonds, boasts of a good pedigree. It is reflected in the credit ratings of 'CARE AA+' by CARE and '[ICRA] AA+' by ICRA, indicating high safety for timely servicing of debt obligations. Also, the tax benefit on . 20,000 per annum is in addition to the benefits available under sections 80C, 80CCC and 80CCD.


The bonds are locked in for five years. If you need funds in the interim period, you cannot even pledge or hypothecate these bonds, and there is no exit.

 
You can get the application form for  L&T Infra Bonds below:

 

L&T Long Term Infrastructure Bond Tranche 1

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