What are infrastructure bonds?
To channelize long term retail flows into the Infrastructure sector, the Government of India had introduced Section 80CCF under the Income Tax Act, 1961 (‘the Act’). This section provides for an income tax deduction for an individual investor who subscribes in the Long-Term Infrastructure Bonds (‘Bonds’), issued by certain financial institutions.
Presently, individual investors have various options to invest upto 1 lakh into various instruments such as PPF, Insurance, ELSS etc as allowed under sections 80C, 80CCC and 80CCD of the Act.
An investment in infrastructure bonds under Section 80CCF is an additional window to save tax upto 20,000, over and above the 1 lakh limit already available.
Long term Infrastructure Bonds by IDFC
IDFC has come up with its first tranche of Long Term Infrastructure Bonds for financial year 2011 – 12. These Bonds would be for a period of ten year with an option to the investor to buyback the same after five years. These bonds have got the highest credit rating of (ICRA) AAA by ICRA and Fitch AAA (ind) by Fitch.
Issue opens: November 21, 2011
Issue closes: December 16, 2011