Bond is known as the financial instrument that trades debt through an open market. They’re announced by the government or government-authorized infrastructure companies to finance their various operations, which in return provide a decent rate of interest along with Tax Benefits.
Tax saving infrastructure bond is a better option for the people who are looking for fixed income.
The Borrowings, also known as Infrastructure Bonds, are invested in government-funded infrastructure projects within a country where Governments and infrastructure companies borrow money from individuals for various infrastructure projects.
These bonds comes with a maturity and the period of maturity is between 10-15 years. It also provides an option to buy back after lock-in period of 5 years, where you cannot sell the particular instrument.
- Under Section 80 CCF, investments up to Rs20000 are eligible for tax deduction.
- Under section 80C, tax deduction available is over and above Rs1 Lakh. These long term bonds take 10-15years to get mature.
- Interest income applies to the bonds if annual interest is less than Rs5000 with no source tax deduction.
Benefits of Bonds:
- By investing in Infrastructure bonds, you are ready to become a part of India’s Infrastructural growth.
- The Bonds held in both Demat and Physical forms. The Demat form makes your investments easy to handle and monitor regularly.
- It increases the chances of listing on the national stock exchange and Mumbai stock exchange that will increase your liquidity.
- The issuing companies have high credit ratings, so the risk is low.
Who can apply?
Anyone who is the residents of India (Not minor) or Hindu Undivided Family (HUF) are eligible to invest in Infrastructure bonds with the minimum investment amount of Rs.5000. An individual should submit only one application based on the Permanent Account Number multiple applications will get aggregated. There is no option for NRIs to invest in such bonds.
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