You are aware that you can save Rs. 20000 under section 80 CCF for getting additional tax exemption other than Rs. 100000 under section 80 C. For this exemption you have to take infrastructure bonds from some approved institutions. There are a few infrastructure bonds of this kind are already issued and closed the issue after the specified closing date. At present Rural Electrification Corporation Ltd (REC), a Navaratna enterprise also comes with infrastructure bonds which can claim exemption under section 80CCF.
The issue is already opened on 12th January, 2011 and the closing date is 28th March, 2011. They are planning to collect Rs. 50 Crore by issuing One Lakh bonds of Rs. 5000 each. There are two options for these bonds. One is that you can withdraw money after 5 years (Buy Back Option) and the other option is that you can hold it till the maturity of 10 years. You can earn 8% annual interest for the first option and 8.1% annual interest for the second option. In both options the interest is payable annually through cheques Demand drafts or Direct Deposit as per your choice. There is no interest accumulation option is available. The minimum required investment is two bonds with Rs. 10000.
Even if this is an unsecured bond (no assets are backed for this bonds) the bond acquired a good credit rating by all major credit rating agencies. The credit ratings are AAA /Stable’ by CRISIL , ‘CARE AAA’ by CARE, ‘LAAA’ by ICRA and “AAA(IND) by Fitch.
The company planned to pay the first interest on 31st March, 2012 and the subsequent payments will be every 31st March till the redemption or buy back. The Bonds are expected to allot to the applicants on 31st March, 2011. The bonds will be listed in NSE and BSE.
By investing Rs. 20000 in such infrastructure bond the tax payers in top tax bracket (30%) can save a tax of Rs. 6180 (Tax Rs. 6000 and Education Cess Rs. 180). And others can save Rs. 4180 (20% tax bracket) and Rs. 2060 (10% Tax bracket). This is a good chance for tax payers to save tax at these 11th hours of the financial year.
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