Infrastructure Bonds: A new avenue to save tax

If you have exhausted the Rs.100000 limit under section 80C, don't worry; there is another avenue to save tax.  A new section 80CCF was introduced in the 2010-11 budget. Under this section an investment upto a maximum of Rs. 20000 in infrastructure bonds would be deductible from your taxable  income. This deduction of  Rs.20000 will be over and above the Rs.100000 limit of deduction available under section 80c,80ccc and 80ccd. 

       

                Long term infrastructure bonds will be issued by

IFCI- Industrial Finance Corporation of india
LIC - Life Insurance Corporation of India
IDFC - Infrastructure Development Finance Company 
NBFCs classified as Infrastructure Finance Company by RBI .
                                     
These  bonds will mature after a period of  10 years. But the investors can exit from the bonds after the 5 year lock-in period.IFCI bond is now closed for subscription.  Only IDFC infrastructure bond and REC infrastructure bond are currently open for subscription.  The IDFC bond  issue closes on  February 04, 2011.  The REC infrastructure bond isssue will close on March 28, 2011.  

                                                   These bonds offer  a yield of 8% compounded annually.

For details about REC infrastructure bonds  click on http://www.recindia.nic.in/infra.html

                     For  IDFC infrastructure bonds click on http://www.idfc.com/infrastructure_bonds.htm