L&T Infrastructure Bonds - Introduction,Tax Rebate Under Section 80CCF, Opening & closing date,Features, Min. investment,credit rating,List of banks

L&T Infrastructure Bonds - Introduction,Tax Rebate Under Section 80CCF, Opening & closing date,Features, Min. investment,credit rating,List of banks

L&T Infrastructure Finance Company Limited (L&T Infra) is a wholly owned subsidiary of Larsen & Toubro Limited. L&T Infra is a Non Banking Financial Company (NBFC) registered under Reserve Bank of India (RBI) Act 1934. The company has commenced operations in January 2007.It leverages L&T’s expertise in the infrastructure sector to offer turnkey financial solutions.

L&T Infra issues long term Infrastructure bond from 15th October, 2010 to 2nd November, 2010. This is also same as earlier infrastructure bonds and suitable for getting tax exemption under section 80CCF. Under Section 80CCF, one can invest in permissible infrastructure bonds and get an additional exemption of Rs. 20000.

L&T Infrastructure Bonds Features

There are 4 series of L&T Bonds, and though these bonds have a term of 10 years, there is an option of a buyback after 5 years or 7 years.

The interest rates, and effective yields of different plans are shown below:

Series	Tax Bracket	1	2	3	4
Face Value	—-	Rs. 1,000	Rs. 1,000	Rs. 1,000	Rs. 1,000
Interest Payment	—-	Annual	Cumulative	Annual	Cumulative
Interest Rate	—-	7.75%	7.75%	7.50%	7.50%
Maturity	—-	10 years	10 years	10 years	10 years
Buyback in years	—-	7 years	7 years	5 years	5 years
Yield on Buyback	30.9%	15.23%	13.59%	17.20%	15.75%
	20.6%	12.31%	11.36%	13.42%	12.58%
	10.3%	9.86%	9.44%	10.23%	9.86%

L&T Bonds Minimum Investment

The minimum investment needed for you to invest in these bonds is Rs. 5,000 because you have to apply for a minimum of 5 bonds, and the face value of each bond is Rs. 1,000.

Open and Close Date

Subscription opened on October 15th, and will close on November 2nd 2010.

Credit Rating

The L&T bonds have been rated CARE AA+ by CARE and LAA+ by ICRA which indicate high credit quality and that the rated instruments carry low credit risk.

How can you invest in the L&T Infrastructure bonds?

You can invest in these bonds either in the physical form or electronically through brokers like ICICI Direct. You can buy a form through one of the several agents across the country and invest in it through them as well.

Here is a list of banks listed on their website that can give you more information as well:

Axis Bank

DBS Bank

HDFC Bank

HSBC Bank

ICICI Bank

IDBI Bank

ING Bank

SBI Bank

Tax on interest earned from the L&T Infrastructure bond

The interest itself is not tax free. It’s only the Rs. 20,000 you get reduced from your taxable salary that helps save tax.

L&T Infrastructure bonds to list on NSE after 5 years

The Bonds are proposed to be listed on NSE, and can be traded after the initial 5 years lock-in period. After this lock-in period, the holders can also pledge the Bonds with banks for availing financial assistance.

You don’t need a demat account to invest in these bonds

L&T will offer you the option to hold the Bonds either in Dematerialized or Physical Certificate form.

NRIs can’t apply in the L&T Bonds

Non-resident investors including NRIs, FIIs and OCBs are not eligible to participate in the Issue.