IFCI (The Industrial Finance Corporation of India) has come up with infrastructure bonds which are eligible for tax deduction under section 80CCF of the Income Tax act, 1961.
The salient features of IFCI long term infrastructure bonds are as below. In case of over-subscription IFCI can issue more bonds.
The face value is Rs 5000.
Issue Price: At Par i.e. Rs 5000 (since you would be involved in the primary market investment)
Minimum subscription is 1 bond.
Total Quantity: 1,00,000
Total Amount IFCI wants to raise through the issue: Rs 50 Crore
Type: Private Placement basis i.e. the primary market issue is not available for sale on exchanges for example RDM (Retail Debt Market) segment of NSE.
Security: Unsecured i.e. these are not backed by any assets of the issuer.
Credit Rating: AA-, which is an investment grade.
Credit rating agency which awarded the rating: BRIC work Rating India Pvt Ltd.
Tenure: 10 years, with or without buyback option after five years.
Options for Subscription: The Bonds are proposed to provide the following options
Option I – Non-cumulative and Buyback after 5 years: Interest payment is made annually at a rate of 7.85%. Buy-back facility is there after 5 years. i.e. the bond holder can sell the bond back to the issuer after 5 years.
Option II – Cumulative and Buyback after 5 years: Interest is compounded Annually at a rate of 7.85%. Buy-back facility is there after 5 years. i.e. the bond holder can sell the bond back to the issuer after 5 years.
Option III – Non-cumulative and no Buyback: Interest payment is made annually at a rate of 7.95%. Buy-back facility is not there. i.e. the bond holder will have to wait for full 10 years to sell off his holdings.
Option IV – Cumulative and no Buyback: Interest is compounded Annually at a rate of 7.95%. Buy-back facility is not there. i.e. the bond holder will have to wait for full 10 years to sell off his holdings.
Redemption / Maturity: At par (Rs 5000) at the end of 10th year from the deemed date of allotment. For Cumulative Option (Rs 5000), at par with cumulative interest thereon.
Coupon Rate/ Interest Rate:
For Option I & II- 7.85% p.a.
For Option III & IV – 7.95% p.a.
In case of cumulative bonds, interest shall be compounded annually.
Trustee : Axis Trustee Services Limited
Depository: NSDL and CDSL
Registrars: Beetal Financial & Computer Services (P) Ltd.
Mode of Payment: Interest payment will be made through ECS/At Par Cheques/Demand Drafts
Issuance: Demat form only
Trading: Demat mode only
Issue Open Date: August 9, 2010
Issue Close Date: August 31, 2010
The issuer would have an option to pre-close the issue by giving 1 day notice to the Arrangers.
Deemed Date of Allotment: September 15, 2010
Bond Registration Page: Subscription to IFCI bonds
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Sathish Emmadi is a co-founder & editor at Lastbull.com. He is presently working in IT for one of the world’s top mutual fund companies. Handled multiple projects in BFSI (Banking,Financial Services and Insurance) domain. An Engineering Graduate from NITW.
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{ 16 comments… read them below or add one }
Banker to Issue: HDFC bank
Payment in favour of: “IFCI Limited – Infra Bond” either through Cheque/ Demand Draft/ Pay orders and crossed “Account Payee Only” are to be deposited, directly with the designated branches of HDFC Bank.
Hi
I would like to have a clarity on tax treatment of interest.
I would like to take the option of buyback after 5 years and interest payment every year @ 7.5%.
Q1: Will I receive an interest payment of 7.5% every year?
Q2: Will this interest add to my income thus increasing taxable income?
Appreciate a response.
Interest is not tax free. Only the investment up to Rs 20,000 is tax free. However, tax on interest is not deducted at source. You will need to include it as other income while filing returns.
i want deep information about the bond and tax deduction system
Hi Vimal
I will provide you a best bond in Infrastructure because in future this sector give best return please read it
IFCI (The Industrial Finance Corporation of India) has come up with infrastructure bonds which are eligible for tax deduction under section 80CCF of the Income Tax act, 1961.
The salient features of IFCI long term infrastructure bonds are as below. In case of over-subscription IFCI can issue more bonds.
The face value is Rs 5000.
Issue Price: At Par i.e. Rs 5000 (since you would be involved in the primary market investment)
Minimum subscription is 1 bond.
Total Quantity: 1,00,000
Total Amount IFCI wants to raise through the issue: Rs 50 Crore
Type: Private Placement basis i.e. the primary market issue is not available for sale on exchanges for example RDM (Retail Debt Market) segment of NSE.
Security: Unsecured i.e. these are not backed by any assets of the issuer.
Credit Rating: AA-, which is an investment grade.
Credit rating agency which awarded the rating: BRIC work Rating India Pvt Ltd.
Tenure: 10 years, with or without buyback option after five years.
Options for Subscription: The Bonds are proposed to provide the following options
Option I – Non-cumulative and Buyback after 5 years: Interest payment is made annually at a rate of 7.85%. Buy-back facility is there after 5 years. i.e. the bond holder can sell the bond back to the issuer after 5 years.
Option II – Cumulative and Buyback after 5 years: Interest is compounded Annually at a rate of 7.85%. Buy-back facility is there after 5 years. i.e. the bond holder can sell the bond back to the issuer after 5 years.
Option III – Non-cumulative and no Buyback: Interest payment is made annually at a rate of 7.95%. Buy-back facility is not there. i.e. the bond holder will have to wait for full 10 years to sell off his holdings.
Option IV – Cumulative and no Buyback: Interest is compounded Annually at a rate of 7.95%. Buy-back facility is not there. i.e. the bond holder will have to wait for full 10 years to sell off his holdings.
Redemption / Maturity: At par (Rs 5000) at the end of 10th year from the deemed date of allotment. For Cumulative Option (Rs 5000), at par with cumulative interest thereon.
Coupon Rate/ Interest Rate:
For Option I & II- 7.85% p.a.
For Option III & IV – 7.95% p.a.
In case of cumulative bonds, interest shall be compounded annually.
Trustee : Axis Trustee Services Limited
Depository: NSDL and CDSL
Registrars: Beetal Financial & Computer Services (P) Ltd.
Mode of Payment: Interest payment will be made through ECS/At Par Cheques/Demand Drafts
For series II IFCI infrastructure bonds, which are available in the market now, please visit the below links
http://lastbull.com/how-to-apply-for-ifci-seriesii-infrastructure-bonds-allotment-and-buy-back-dates/
http://lastbull.com/ifci-seriesii-infra-bonds-%E2%80%93-section-80-ccf-tax-saving/
IFCI infrastructure bond is closing on december 31 2010. It is a very good opportunity to claim tax exemption on additional Rs 20,000. Infra bond is better option than SIP for 5 years.
Hi,
I want to buy Infra bond. Please can any body suggest good one.
To buy one infra bond is demat a/c must??
Rohit
Hi,
Can someone help with a good option of a Bond that has additional deduction on 80cc, 1.e. investment of rs 20000/- over and above the celing limit of rs 100000/-
Regards
Samrat
Hi,
I wish to enquire about the documents required to deposit in my company to claim 80CCF rebate. What all to be submitted to get the rebate
Hi Pankaj,
Once the infra bonds are allotted a bonds’ certificate will be sent to your registered address. You will need to submit a copy of this certificate to avail tax exemption from your employer.
Some companies will also consider paid receipt (if done offline)
pls. send me the updates for all the infra bonds….which are currently running in the market…
Hi Pankaj,
REC infra bonds are open for subscriptions till 31st March 2011.
http://lastbull.com/rec-infrastructure-bonds-fy-2010-%E2%80%93-2011/
L&T 2011 A series starts from 7th feb
http://lastbull.com/lt-section-80-ccf-infrastructure-bonds-%E2%80%93-2011-a-series/
sir. I applied for IFCI longterm infrastructure bonds series II.on 23.12.2010 vide form.no.505926 and payment Rs.20,000/-mmade through bank which cleared on 29.12.2010 tilldate I have not recieved any Interest,nomination form and above Bonds or any corrospondance.
willyou please guide me,so that I could know,wheather
infrastructure bonds are alloted to me.
thanking you,
UshaBansal
Hi Usha,
First of all, interest is paid only annually, if you have opted for it. In cumulative option, the interest is paid along with the principal at the end of maturity/buy back period.
Regarding, bonds certificate you will need to contact RTA/IFCI
Hi Satish,
Can you pls send me info about which all infra bonds I can buy in this month for tax exemption under section u/s 80 CCF?
Would be more interested in L&T, but I guess its too late for this year. Is it?
Appreciate it.