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Tuesday, October 5, 2010

LIC Infrastructure Bonds: Save tax of Rs 20,000 under section 80CCF, Lock in period, Review, Term & other infrastructure bonds



If you are tax payer then you can save more tax by investing in LIC Infrastructure Bond. Additional Rs.20,000 Tax Exemption under Section 80CCF.

LIC Infrastructure Bond at Glance:

  • Term: 10 years
  • Minimum lock in period: 5 years
  • Loan on Bond: After 5 years
  • Interest Rate: 7.85%-7.95% after tax.
  • Exit options: Buy back or through Demat account
  • Open for Individual or HUF.
  • Any individual or HUF can invest in LIC’s Infrastructure Bonds Between Rs.5000 – Rs.20,000/- This will be over the Rs.1 lakh deduction allowed under Section 80C.

Tax benefit example:

If you are in highest tax payers bracket of 30% can save an additional Rs 6,000 and if you happen to fall in the lower tax bracket then you can still save Rs.2,000/- by investing in LIC infrastructure bonds this financial year.

LIC infrastructure bonds not only offers capital safety but also offers fixed returns through ECS.

After lock in period is over, you can ask issuer (LIC) to buy back bonds Or you can trade these bonds in stock Exchange.

You should have a Demat account to invest in infrastructure bonds.

Other Infrastructure bonds:

  • Industrial Finance Corporation of India (IFCI),
  • Infrastructure Development Finance Company (IDFC) and
  • Non-Banking Finance Company (NBFCs) who are classified as an infrastructure finance company by the Reserve Bank of India (RBI)

This bond will boost the infrastructure projects in India and at the same time you will get tax benefit and good return.

1 comment:

Kunal Chib said...

As mentioned above that "This will be over the Rs.1 lakh deduction allowed under Section 80C.".

Just want to update you an individual can invest upto Rs.20,000 as the excemption can only be taken under 80CCF maximum upto Rs.20,000 of investment.

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