What are infra bonds? | How to invest in Infra bonds to avail the tax reduction under section 80CCF?

December 12th, 2010| Uncategorized.

What are infra bonds? | How to invest in Infra bonds to avail the tax reduction under section 80CCF?

What are infra bonds

They can get the reduction up to one lakh rupees under the section 80C and the section 80CCF provides the reduction of amount Rs.20,000. The bonds released by the infrastructural development finance corporation. The IDFC is trying to get Rs.3400 crores by introducing these bonds. The Indian nationals or the Hindu family members are eligible to take the bond and they should have the PAN card and DMAT account compulsorily. They are available in four types and their duration is ten years.

  • The direct value of each bond is Rs.5000 and they should take minimum of two bonds. They can next apply for any number of bonds and they should remember that the tax deduction is given to Rs.20, 000 only.

Series 1:

They pay the interest of 8% on the amount deposited from time to time. Even the ten years are completed, the price of the bond is Rs.5000 only.

Series 2:

They give 8% of interest only in these bonds also but they give the total amount after completing the duration of ten years.  For the bond of Rs.5000, they get an amount of Rs.10, 800.

There is an opportunity to sell the above two bonds after five years.

Series 3:

They give 7.5% interest and after five years, the IDFC will buy back the bonds. The interest will be deposited in to the bank account and they will give the same amount of Rs.5000 even if they return after 5 years or ten years.

Series 4:

The interest is 7.5% and is calculated on the basis of compound interest and they pay an amount of Rs.10, 310 at the end of the ten years. They will but the bonds after five years and they pay Rs.7, 180 or they can continue for ten years based on their interest.

  • They can’t take the loans on the banks until the duration of five years is completed but they can take the loans after five years.
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