Thursday, 22 September 2011

Claim 20000 Tax Exemptions with IFCI Bond

First Infrastructure bond in this financial year, attracts Income Tax exemption under section 80CCF claimed exclusively by Industrial Finance Corporation of India (IFCI). This is just after the report regarding the issue of Infrastructure bond by the Economic Times.  The report said that as per the direction of the Finance Ministry this financial year each issuers of infrastructure bond can issue 25% more volume that of last financial year (2010-11).

The issue of IFCI Infrastructure bond opened on 20th September, 2011 and the issue will be closed on 14th November, 2011. The date of closing may be extended or pre closed with 24 hours notice by the issuer. The date of allotment of the infrastructure bond is 12th December, 2011. The investor can claim Income Tax Exemption for Rs. 20000 in infrastructure bond under section 80CCF in addition to Rs. 100000 exemption under section 80C.

There are 4 options in the infrastructure bond as per the payment of interest and maturity date. The investor can choose the maturity after 10 years and 15 years. There is cumulative interest option and annual interest payment option in both 10 years and 15 years bond.

The Face value of one unit is Rs. 5000 in all options and the minimum required investment is one bond of Rs. 5000. The rate of interest for 10 years bond is 8.5% and for 15 years bond is 8.75%. If cumulative option you will get Rs. 11305 and Rs. 17596 at maturity respectively for 10 years and 15 years bond on 12th December, 2021 (for 10 years bond) and 12th December, 2026 (for 15 years bond). For annual interest payment option the Coupon payment date of interest is 12th December every year till maturity.

If you are interested to buy the IFCI Infrastructure bond apply with crossed “Account Payee Only” Cheque/Demand Draft/Pay order in favor of, “IFCI Limited – Infra Bond” Or apply online through your Online Trading Account.

Infrastructure bond issued by Industrial Finance Corporation of India (IFCI), Life Insurance Corporation (LIC), Infrastructure Development Finance Company (IDFC), India Infrastructure Finance Company Ltd (IIFCL) and Non-Banking Financial Companies (NBFCs) classified as infrastructure finance company by RBI are eligible for getting Income Tax Exemption under section 8oCCF.

Those who are looking for saving maximum tax, infrastructure bonds are good option. But the interest received from infrastructure bond is taxable even if there is no TDS deducted at source.

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