Section 80CCF Infrastructure Bonds FAQ

by Manshu on December 9, 2010

in Tax

I’ve fielded a lot of questions on the Section 80CCF Infrastructure bonds, and while I’ve written individual posts on the infrastructure bonds that have so far come out under this section, there is nothing on this section itself, so I’m going to address some common questions about  Section 80CCF with this post.

It goes without saying that all these questions have popped up in the comments section at one time or the other (well, not the first one).

Is 80CCF a new Space Shuttle?

I wish it were, but it’s not even remotely as cool as that. In fact, it’s just a new section that allows Non Banking Financial Companies (NBFCs) to issue infrastructure bonds, and investors who invest money in these bonds can get an additional tax benefit.

What is the additional tax benefit under 80CCF?

All of you know that you can reduce your taxable income by investing in certain instruments like tax saving fixed deposits, or tax saving mutual funds, but the limit on the deduction from your taxable income is Rs. 100,000.

So, if you invest Rs. 150,000 in tax saving mutual funds – the tax benefit will be capped at Rs. 100,000.

Section 80CCF allows you to invest an additional Rs. 20,000 in infrastructure bonds, and have that reduced from your taxable income in addition to the Rs. 100,000 deduction you get from the other instruments.

Section 80CCF Infrastructure Bond FAQs

Section 80CCF Infrastructure Bond FAQs

Will I get the tax benefit every year, or just one year?

You will get the tax benefit only in the first year, which means that if you buy bonds worth Rs. 20,000 in this year – Rs. 20,000 will be deducted from your taxable income while calculating tax this year

There is no tax benefit from next year onwards.

I have  a tax liability of Rs. 12,000 – will that become zero if I buy bonds worth Rs. 12,000?

No, that’s not how they work. Buying the bonds will not lead to a reduction in the tax paid by reducing that amount from your tax burden.

The benefit comes from reducing your taxable salary by the amount of your investment, so that the final tax burden is reduced.

Is there TDS on the interest?

For bonds that are issued only in electronic format there is no TDS, however that doesn’t mean that there is no tax on them.

Is the interest from these bonds tax free?

While there may be no TDS on the interest on these bonds, they are taxable, and the interest will be added to your income, and it will be taxable.

Do I need a Demat Account to invest in these infrastructure bonds?

Every bond issuer has different terms, and it depends on what their terms of issue are, but the IFCI issue is open only for Demat account holders, while the IDFC and L&T issues were available to people who wanted to subscribe via physical form as well.

Will these 80CCF bonds be listed on a stock exchange?

Yes, the bonds will be listed on a stock exchange, however they come with a lock in period, and you can’t sell them before the lock in period. For example, the IDFC bond had a lock in period of 5 years, so you can’t sell these bonds within 5 years, but once they list you will be able to sell them.

I missed the existing issues, will there be new infrastructure bond issues?

Yes, there are going to be more 80CCF infrastructure bond issues in the future, and if you missed the earlier ones, there is still a chance to get these bonds.

What tax proof will I get if I applied for the infrastructure bond in dematerialized form?

You will get allotment advice in the mail that you can use for tax proof, and if you haven’t received the proof then some people have been advised that they can use the copy of their Demat holdings to show that you own the bonds.

Can NRIs invest in Section 80CCF bonds?

The bonds that have been issued so far haven’t allowed investments from NRIs, and I think there might be some clause which limits NRIs from investing in these bonds.

Since I need a Demat account to buy these bonds, will I need a broker to exercise the buyback option?

You won’t need a stock broker to exercise the buyback option. In the case of IFCI you can write to them and ask them to exercise the buyback, and in the case of IDFC and L&T they can exercise it by buying it back from you and crediting your bank account, so you don’t need a broker.

You will need a broker if you decide to sell it on the exchange though.

When will I receive the physical allotment advice letter, and when will I start seeing them in my Demat account?

This is a question that has been tormenting a lot of people because the companies issuing these bonds don’t bother to communicate when the bonds will be allotted or when they will send the allotment advice letter.

No one can say for sure if the company doesn’t communicate this, but I’ve seen that the past couple of issues have taken about 3 – 4 weeks from closing of the issue to credit the bonds, and then an addition 2 or 3 weeks for the letter to arrive.

How are the yields for these bonds calculated?

This question is a bit more involved, and I have done full posts on how yields for tax saving bonds are calculated, as well as the limitations of the method used to calculate them and you can go through these posts to understand this better.

How can I keep track of these 80CCF infrastructure bond issues?

I have created this post with the calendar of 80CCF bond issues, and you can check that periodically to see if there are any new issues. This will also be widely reported in news articles, so it’s quite likely that you come across them in your daily reading.

Any other questions?

I’ve tried to cover all questions that I see pop up frequently, but if you have any other questions feel free to leave a comment, and I will try to answer them.

{ 147 comments… read them below or add one }

Hema December 10, 2010 at 6:10 AM

Good post Manshu. I missed using this instrument. On second thoughts, I feel I should have done some savings using this. Now that I have submitted the tax savings proofs etc for this year, I have to wait till next year to utilise this method. Though I am bit skeptic on the returns and also the lock-in period being a big negative, which was the reason I dint consider this in the first place.

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Manshu December 10, 2010 at 7:00 AM

Thanks Hema, this Section was introduced this year, and I’m not sure if the plan is to continue to have this next year also, or if it was just one off.

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Sudhakar December 11, 2010 at 3:16 AM

I have one more question in this regard. If I have to trade this bond in the share market after 5 years, how do I transfer my holdings to others (the physcial form of Bond). Also please explain the difference between buyback and selling stock exchange.

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Manshu December 11, 2010 at 5:31 PM

I don’t think it is possible to sell physical bonds on the stock exchange, so you will have to dematerialize them. However, you can exercise the buyback.

In case of buyback you sell the bonds to the issuer like IFCI on a pre determined price. In the case of selling it in the stock exchange it’s like selling it to someone else, and the price will be based on the interest rates at that time. If the interest rates move upwards then the price of these bonds will be lower and vice versa.

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Ganesh December 12, 2010 at 8:24 AM

Is it possible buy now across counter? In my office I need to submit proof for 80 CCF by second week of January? If I subscribe now for IFCI it would be delayed to get allotment letter. Is there any other way? like NBFC or other way?

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Manshu December 12, 2010 at 3:25 PM

You can’t buy across the counter, but you can physical form now, so you can try that out, and see if the receipt they give will serve as a proof. You will need to check that with your company’s tax department first though.

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venkatesh December 14, 2010 at 5:05 AM

mr. ganesh i am venkatesh marketing exucutive from ultimate investment in bangalore u want any clarification that product call to dis number 9591057900

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Saroj Subudhi December 16, 2010 at 7:27 AM

Can I purchase bond now to get Tax benefit for this running year.

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anmol dheraj December 17, 2010 at 1:01 AM

yes, you can save tax if you invest in infrastructue bond which comes under 80ccf
thanks
anmol dheraj
9892573584

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naresh verma December 19, 2010 at 6:21 AM

if I’ve no demat acctt. what will the proocess of investing in infra-struct.bonds? can I jointly apply with my wife who has demat acctt.? can I avail tax benefits in this way?

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Manshu December 19, 2010 at 8:17 AM

You can invest in physical form also Naresh. IFCI, which is the issue currently open has allowed people to subscribe in physical form now, so you can avail that, or when a new issue comes you can apply in the physical form for that.

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nisha December 20, 2010 at 11:41 PM

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.

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Manshu December 20, 2010 at 11:42 PM

Nisha,

I don’t understand why you’re leaving the same comment on every post stating that these bonds are better than SIPs.

They are two different things – if you’re affiliated with IFCI in anyway then please disclose it as a courtesy to other readers. Thanks!

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MAHABOOB BASHA December 24, 2010 at 10:28 AM

Dear sir, I want to make a investment in Infrasture bond under section 80CCF kinldy inform what is the lock in period.. whether i can withdraw the investment after 3 years.. and kinldy suggest me some of good infracture bonds, so that i can make the investment.

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Manshu December 28, 2010 at 8:19 AM

There hasn’t been anything that had a lock in for only 3 years, and I don’t think there will be anything in the future with that time frame either. Only IFCI is open right now, but a few others might come out early next year.

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bhagwan December 29, 2010 at 3:01 AM

I have a deemat account in co-op bank & my wife doesn’t have deemat account at all, but of us have PAN and now want to go for IFCI tax saving infrastructure bonds, please tell me the procedure for the same,viz. Can be make it online/physically only? Reply promptly.

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Manshu December 29, 2010 at 9:47 PM

You can apply it in Demat form by giving in the Demat number when you apply for it, and your wife will necessarily have to apply in physical form. You will need to get to a bank branch or somewhere close to your home where they are accepting the forms – fill them up, and provide it to them with the necessary proof.

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Kailash January 3, 2011 at 10:56 PM

Since IFCI Infra bond was open till 31st Dec 2010 which already passed. Is there any Infra bond available now to invest with out using Demat Account. Please advise.
Can we use wife’s name Infra bond for own purpose as tax benefit if she is not using it?

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Manshu January 3, 2011 at 11:18 PM

IFCI has been extended till 12th Jan, so there is still time if you’re interested for that.

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RAM AGRAWAL March 18, 2011 at 2:37 AM

U have not replied abt Kailash’s 2nd query abt wife’s name

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Manshu March 18, 2011 at 5:15 AM

I have replied to the same question over and over again in several places. And in future if you have to ask a question yourself frame it in a more courteous manner than this or ask it somewhere else.

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santhosh January 3, 2011 at 11:44 PM

What are the newly released bonds in jan 2011 for 80ccf and when is the closing date ?

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Manshu January 4, 2011 at 2:25 AM

IFCI got extended till 12th Jan Sathosh, I’m not aware of anything else that’s open right now.

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Parthasarathi January 4, 2011 at 11:01 AM

Can a mutual fund advisor(AMFI Certified Agent) sell Infrastructure With their ARN number. Because they also known completely about the bonds & its risks, features in his past AMFI exam. Is that possible to tie ups with NBFC like AMC. I am rising this issue because now bonds are available physical formate. Please reply with your valuable solution.

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Manshu January 4, 2011 at 11:25 PM

Well, as far as I know the fund companies haven’t shown any interest in going the agent route so far. Most bond issues have had to extend their closing date, and extend from only Demat to physical form also, so that shows that there is a mismatch between perceived demand and ground reality so things might change in the future.

So, keep an eye out, and I guess you can always check with your existing client base to see if they need this type of service for a fee. All the best.

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Kailash M Bajaj January 6, 2011 at 11:25 PM

How do I get certificate for the bonds I purchased thorugh ICICI direct online.

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Manshu January 7, 2011 at 12:03 PM

They will send an allotment advice, but it takes time, so if you’re asking how can you get one immediately I don’t know the answer to that.

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Azad Wanti January 7, 2011 at 9:38 PM

any infrasturucture bond available now

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Manshu January 7, 2011 at 11:55 PM

IFCI is open till 12th January.

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K.GOVINDA RAJU January 10, 2011 at 7:24 PM

Dear All,
I want the following clarification.
1)Whether the interest paid on 80 ccf Bonds are taxable. I mean to say that whether the interest income has to be added to the income every year at the time of filing return or TAX FREE.(I am not telling about TDS on Investment, as the total interest will not cross Rs.2500/- per year for the investment of Rs.20000/-
2)whether the proceeds of the Bonds, if redeemed after the lock in period are tax free or should it be treated as CAPITAL GAINS and to be added to Income on the financial year of Redemption.

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Manshu January 11, 2011 at 8:39 AM

1. Yes, interest is taxable.
2. Yes, they will be taxable as well.

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K.GOVINDA RAJU January 11, 2011 at 9:41 AM

Thanks Manshu for the Immediate response.

Govinda raju.K.

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Girish February 3, 2011 at 3:04 AM

Hi, Can you please explain how the Capital gains tax is calculated for a cumulative bond with say 8% interest which is bought back at the end of 5 years as per the current tax laws.

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Manshu February 3, 2011 at 10:34 AM

Not sure about that Girish.

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sameer January 12, 2011 at 10:22 AM

I have a tax liability of Rs. 12,000 – will that become zero if I buy bonds worth Rs. 12,000?
No, that’s not how they work. Buying the bonds will not lead to a reduction in the tax paid by reducing that amount from your tax burden.

The benefit comes from reducing your taxable salary by the amount of your investment, so that the final tax burden is reduced.

sir i have to do savings for Rs 120000,out of which i have done for Rs100000, if i purchase these bonds for Rs 20000 then will it complete my saving ?

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Manshu January 12, 2011 at 10:32 AM

If I understand your question correctly Sameer – you have already done investments for Rs. 1 lakh, and now want to invest Rs. 20,000 more to get additional tax savings to max out all your tax saving avenues.

If that’s what you are asking then yes, investing 20,000 in these bonds will help you get over and above the 1 lakh limit.

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d bilvam January 12, 2011 at 7:39 PM

Hi,

What is the process of demating the physical bond to the customers dp id

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Manshu January 13, 2011 at 12:47 AM

Via email by Govindaraju K
Hi,
You have to submit the Physical Bond to your DEPOSITORY PARTICIPANT furnishing your name and the DP ID. On receipt of the Bond they will take care for processing to credit your DEMAT Account.

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Anand January 15, 2011 at 6:08 AM

Any Infra bond Issues open currently?

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Manshu January 15, 2011 at 6:10 AM

REC is currently open, and IDFC will be on 17th Jan Anand.

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dr ravi jindal January 25, 2011 at 9:00 AM

i have missed the ifci infrasturcture bonds. kindly advice on the ones currently available and also for lic infrastructure bonds

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Manshu January 26, 2011 at 7:09 PM

Dr. Ravi Jindal,

REC & IDFC Tranche 2 are currently open. LIC has indicated that it might not come out with their bonds this financial year, so if you decide to wait for LIC you might miss them out altogether

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Kailash January 26, 2011 at 9:35 PM

How can we get the status of our IFCI infrastructure bond application?

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Manshu January 27, 2011 at 8:37 AM

Kailash – I’m not aware if there is anyway to do that right now.

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R.G.Sharma February 3, 2011 at 7:27 AM

Whether Infrastructure Bonds are in ETT catagory or EET or in EEE catagory. In other words as I understand the principle amount redeemed shall be required to be added to taxable income. Is it true?

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Manshu February 3, 2011 at 10:32 AM

No, that doesn’t make any sense because the primary benefit of investing in these bonds is that they allow you to reduce your taxable income, and thereby reduce tax.

If they were to add the value of the bond back to your income what good would that do?

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Ashwini February 7, 2011 at 7:07 AM

I have invested 70,000 in PPF, If i invest further 30,000 in IDFC,
will I get deduction upto 1,00,000 from taxable income.

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indu February 8, 2011 at 12:00 AM

is this deduction also available 2 persons having 70000 as a total of deduction under 80c or it shd be 100000 4 using this 20000 deduction ?

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asis February 23, 2011 at 10:02 AM

hi, i was wondering that can these bonds be bought by a private limited company to save on capital gains from sale of property??

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Manshu February 23, 2011 at 2:05 PM

No Asis – there’s no provision for that.

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mahesh February 27, 2011 at 11:09 PM

I have invested Rs.20000 in IFCI Infrastructue bond in physical format since I dont have DEMAT account. But, till to day I have not received the bonds. So, Let me know the procedure to get the information about it.

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Manshu March 3, 2011 at 8:44 AM

You can check the status of your bonds in this link http://www.beetalfinancial.com/bond.aspx

Check out the comments of this post and you will get a lot more info on this as there are many other people in the same situation.

http://www.onemint.com/2010/11/23/ifci-infrastructure-bonds-tax-saving-bonds-under-section-80-ccf/

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Bairam Sunil Kumar March 2, 2011 at 6:33 AM

Hi Manshu,
As the upper limit for investing is 20,000/- Can I do this amount in different bonds, what will be the best time of investing for the next financial year 2011-2012.

Thanks
Bairam

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Manshu March 3, 2011 at 8:26 AM

Yes, this can be done in diff bonds.

The only thing I’ll add to what Shiv has said, and this is something he has said in the past is that there isn’t going to be a lot of difference in terms of absolute interest you earn from two bonds since they are capped at an upper limit, and it makes sense to only invest up to 20K for tax saving purpose.

So, I wouldn’t wait too long to invest in the bonds so that I have the proofs and other documentation in time.

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Deepak March 2, 2011 at 8:59 PM

Whether bonds u/s 80CCF are EEE or EET or ETT or ETE?

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Manshu March 3, 2011 at 8:17 AM

Deepak – the money that you invest in them will be reduced from your taxable salary up to a cap of 20k, and there’s no other tax benefit outside of that.

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dilip goswami March 5, 2011 at 3:00 AM

i have investment over 1.00 lacs.i am getting standard deduction of 1.60 lacs .after these deduction iam in tax group of rs 1 to 3.00 lacs.i have purchased infra structure bond of rs 20,000(l&t). how much amount i shall get exemption on income tax on this amount of rs 2000.00?

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Manshu March 5, 2011 at 10:41 AM

Dilip – the 20,000 from the infra bonds will also be deducted from your salary in order to calculate taxable income. So just like the way you reduced the 1 lac – you can reduce an additional 20k as well.

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AVGN Vara Prasad March 5, 2011 at 5:21 AM

Sir,

Is LIC is going to issue INFRA Bonds or not. If not I can go for an alternative option.

Thanks & Regards,

Vara prasad AVGN

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Manshu March 5, 2011 at 10:38 AM

No, most probably they won’t be. The alternates are IDFC, REC and IFCI.

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Ashish Gupta March 7, 2011 at 9:01 PM

Dear Sir,
In case a bond is purchased in the name of my father and the payment is done from his account only, can I claim the deduction of the such investment?

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Manshu March 8, 2011 at 3:10 PM

To the best of my knowledge this is not possible Ashish.

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Kausik March 12, 2011 at 8:41 AM

Dear Sir, I have invested Rs.910000/- under section 80c(LIC,PPF,PF). I have also invested Rs.20000/- in Infrastructure Bond.What will be the total deduction for my Income Tax F-Y 2010-11.

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Manshu March 14, 2011 at 3:41 PM

1 lakh out of the 9.1 lacs you invested in 80C and 20K for infra bonds so 1.2 lacs in all.

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Kausik March 14, 2011 at 7:02 PM

Dear Sir, I have done a mistake.I have invested Rs.91000/-(instead of Rs.9100000/-) under section 80c(LIC,PPF,PF). I have also invested Rs.20000/- in Infrastructure Bond.What will be the total deduction for my Income Tax F-Y 2010-11.

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Manshu March 15, 2011 at 4:59 PM

Okay that’s cool – so 91,000 under 80C and 20,000 under 80CCF. 1,11,000 in all.

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Aniket March 17, 2011 at 7:57 AM

i want to know if i sell these bonds after 5 years and have taken a cummulative option will ther be any tax and on how much tax will be payable?

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Manshu March 17, 2011 at 6:27 PM

Capital gains will be charged on that amount Aniket.

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binod kumar March 20, 2011 at 7:46 AM

my incometax savings is 64000/- out of which 20000/- is infrastructure Bond.is it valid for nfrastructure Bond which is saving below 100000/-.

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Manshu March 21, 2011 at 10:53 AM

Yes that is still valid.

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Kausik March 24, 2011 at 7:42 AM

Dear Sir,My income from salary for the F.Y.2010-2011 is Rs.350000/-.My investment under section 80c is Rs.90000/-.I have traded share with my online trading a/c 5 or 6 times throughout the year and gaining Rs.2000/- only.Kindly inform me how to calculate my taxable income.
With regards,
Kausik Pramanik

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Manshu March 24, 2011 at 4:37 PM

You can use the calculator on this site to get an idea.

http://www.computeincometax.com/

I’m not a tax expert myself so can’t help you there.

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shashikant June 6, 2011 at 4:14 AM

if i use demat a/c as investment then can i claim deduction as expenses of annual demat charges???

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Manshu June 6, 2011 at 5:53 AM

I don’t know about that Shashikant, sorry.

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srivinoth June 8, 2011 at 3:51 AM

1.Will i get tax benefit if infrastructure bond taken in the name of my spouse.
2.Let me know the procedure for LIC-Superannuation in detailed.
3.LTA exemption can be claimed continuasly twice in two years or 2 years once.

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Manshu June 8, 2011 at 6:36 PM
Kailash June 10, 2011 at 11:35 AM

Do we have any open Infrastructure bond now to invest 20K?

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VIPIN September 12, 2011 at 8:04 PM

Is it possible for me to transfer infrastructure bonds in my Demat account to my wife’s Demat Account.

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Manshu September 18, 2011 at 11:03 PM

I don’t know of a way Vipin – these bonds are locked and people who have tried to transfer them have had some problems. You can try seeing if they can be rematerialized and hold it in physical form to close the Demat account. I’m afraid I won’t be of much help but if you try calling their staff they might suggest a way.

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Ajit shah September 23, 2011 at 7:49 AM

Hi,

I appreciate your efforts to help readers with their queries. Even though some of the queries are repetitive, you have still replies to the same again & again.

Thanks for your guidance and informative articles.

Regards,

Ajit Shah

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Manshu September 25, 2011 at 9:50 PM

Very nice of you to leave this comment – thank you so much!

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venkat September 23, 2011 at 5:32 PM

For IFCI Infra Bonds processing, please call me at 9241545354 (for bangalore only).

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vasu October 22, 2011 at 3:32 PM

Hi Venkat,

Can you please let me know what is the commission for a Agent for selling of 20,000 infra bonds.
I mean is it 1% or 1/2%.

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karthik November 15, 2011 at 4:21 PM

Manshu,
The bond tenure says 10 years whereas the lock in period is 5 years. What is the difference? If i dont use the buyback option on the 5th year, what will happen at the end of 10 th year? Will the money invested be deposited in the bank account?
Thanks.

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Manshu November 15, 2011 at 11:57 PM

If they don’t exercise the buyback option – they will continue to own the bond and pay you interest every year. At the end of 10 years, they will mature the bonds. In the bonds that have come up so far, this option is with the subscriber also, and unless interest rates come down dramatically in 5 years – I think it makes sense to exercise the option.

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Seemanth November 16, 2011 at 9:05 PM

Hi Manshu,
Thanks for the information you are providing. I was considering to invest in the Infrastructure Bonds to save tax via 80 CCF. I ahd 2 queries:
1. Currently who provides best interest?(i.e. IDFC, LIC etc)
2. I have understood from your post that the interest each year will be taxed. If I use the buyback option and withdraw my amount invested i.e. 20,000/- will this amount be also shown as income and taxed in the 5th year?
Thanks in advance.

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Manshu November 16, 2011 at 10:36 PM

Hi Seemanth,

1. IDFC with 9% is the highest among those who have issued it so far.
2. No, that won’t be taxed. It’s your money that you take out after the fifth year, and not any sort of gain, so it won’t be taxed.

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Seemanth November 19, 2011 at 10:10 AM

Hi Manshu,
Thanks for your prompt response. You have been answering all our queries very patiently. thanks…

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Manshu November 21, 2011 at 11:57 PM

Thanks Seemanth – I deeply appreciate the fact that you went to the trouble to leave a follow up comment. Thanks!

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Amol November 17, 2011 at 9:22 AM

Dear Sir,
I have invested Rs.40000 in infrastructure bonds. Then how much amount will be considered for final tax exemption? is it possible that 20000 will be considered under 80C and remaining under 80ccf? Presently I am outside of country and can not invest under 80C in person. Will you please tell me is there any option that I can invest in PPF, NSC, postal savings etc through online? or any other 80C scheme?

Thanks
Amol

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Manshu November 17, 2011 at 11:26 PM

To the best of my knowledge, since they are diff sections you can’t use the extra 20K under 80C. This is my idea and I am no tax expert it’ll be good if you check this.

You can always buy 80C mutual funds online, so that’s one way I know that works for sure. If your trading platform allows NSC which I think ICICI Direct does, then that’s another option. Not too certain about anything else.

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jyoti November 17, 2011 at 2:17 PM

will the redemption amount on maturity of the infrastructure bonds be added to the total income of that year for taxation purpose?

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jyoti November 17, 2011 at 2:23 PM

Should the redemption amount on maturity of the infrastructure bonds be added to the total income of the relevant year for the purpose of computation of tax?

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Manshu November 17, 2011 at 11:13 PM

No, if you took the interest option then you paid tax on interest every year and there is nothing on top of that you need to do during maturity.

If you took the cumulative option then you need to calculate capital gains on the bonds and then pay tax on capital gains, not add the whole maturity proceed to your taxable income.

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Jyoti November 18, 2011 at 3:17 PM

Thanks.

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R.V.MURALIKRISHNAN December 10, 2011 at 12:53 PM

Hi

Is there anyway to buy infra structure bonds on line using credit cards> If yes , what is the site and procedure?

Thanks and best regards

R.V.MURALIKRISHNAN

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Manshu December 13, 2011 at 2:15 AM

Not to my knowledge.

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PRADEEP AGGRAWAL December 12, 2011 at 2:18 PM

Dear Manshu,
First we are thankful to you giving response of all queries.

My question is that,
1. After 5 Years when we get the principal amount that will be taxable or not.
(You have already reply for this question on Jan’2011)
At present i got confused.

So pls help to give the reply.

Thanks

Pradeep Aggrawal

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Manshu December 13, 2011 at 2:16 AM

No, that will not be taxed because it is your money that you invested and are getting back after 5 years – only the interest is the money you earn and so only that is taxed.

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Siddharth Kedia December 12, 2011 at 7:01 PM

I wish to invest in Infrastructure bond online is it possible ??? ,, if yes from where ??

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Manshu December 13, 2011 at 2:03 AM

Yes, through your trading account like ICICI Direct or Edelweiss etc.

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Sonal December 14, 2011 at 1:41 PM

Dear Manshu
Can u please clarify the following
For IDFC issued Long term infrastructure bond- the tax saving would be anywhere between 2000-6000. How do we arrive at the exact amount of saving done on investing Rs.20000, in this bond issue?

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Manshu December 14, 2011 at 11:28 PM

Dear Sonal – the way these bonds reduce your tax is by reducing your taxable income. So, if you invest Rs. 20,000 in these bonds – that 20K can be reduced from your taxable salary, and if you were in the 30% tax bracket – you will effectively save Rs. 6,000 tax.

So, how much tax you save depends on two things – what’s your slab and how much over your taxable income can you reduce with investment in these bonds.

Is that clear enough? I think you should be able to figure out how much you save based on this info now.

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Sonal December 17, 2011 at 10:31 AM

Thanks Manshu, This was of great help.

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N Mahesh December 16, 2011 at 11:37 AM

I have a question on Sec 80 CCF Infra Bonds –

Can the redemption proceeds of the bond held in cummulative form be eligible for LTCG? If yes, is it only for electronic form or for both physical and electronic forms.

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Manshu December 16, 2011 at 11:35 PM

Not capital gains but will be taxed like interest income is taxed both for physical and electronic. Remember, these are not tax free bonds – that’s a different thing – these give you tax benefit by reducing your taxable salary but the earning from these bonds is taxable.

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Vikas December 18, 2011 at 8:36 PM

Hi ,
I am bit confuse about Infra bond . I missed the IDFC which was having AAA Rating . Now i have option to go for L&T Infra ( AA+) rating and IFCI ( only A rating) . Which bond i should go ? L&T is private but not sure how will that work after 10 year IFCI is govt agency but having very less rating (A only). Can you guide me which bond should i go.

Thanks
vikas kakkar

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dr.jagadeesha January 17, 2012 at 1:20 PM

as 80 CCF bonds are market linked,do they give any kind of assurance about the returns, because at time of maturity if market was not good we may not get back the money what we have invested. please inform regarding this

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A. Saxena January 19, 2012 at 2:53 PM

IS return of infrastructure bonds are subjected to market Risk??

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Shiv Kukreja January 20, 2012 at 1:34 AM

Hi.. Interest Rates on Infrastructure Bonds are fixed throughout their tenures but not guaranteed in case the issuer defaults on payments of either interest or the whole of your investment itself. But as these bonds are issued by quite reputed Infrastructure Finance Companies (IFCs), there remains very low probability of any default.

Also, these investments are like Fixed Deposits. As FDs are not subject to any Stock Market Risk, these bonds are also not related to any Stock Market Risk. But in case the issuer goes into some kind of bankruptcy, then you can lose your principal also.

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manjeet singh jawa January 24, 2012 at 2:19 PM

Whether benefits of tax rebate of 80C is available I invest Rs. 100000/- in Infra Bonds(80CCF).

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Manshu January 24, 2012 at 8:26 PM

No, but similar benefit under a different section are available. The limit is Rs. 20,000. Please read the post and you will find all the details.

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Shiv Kukreja January 24, 2012 at 9:25 PM

Hi Mr. Manjeet… Tax deduction of only Rs. 20,000/- is what you’ll get u/s 80CCF and the rest Rs. 80,000/- will be of no use for any tax deduction under any section.

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sharmila January 31, 2012 at 12:49 PM

Whether the Infra Bonds (80CCF) invested in the dependents (wife’s) name can be claimed as a tax exemption from the tax payers (husband) taxable income.

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Shiv Kukreja January 31, 2012 at 5:17 PM

No, only the Investor or Sole/First Applicant can claim the tax exemption.

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Mahesh Kumar garg March 8, 2012 at 3:45 PM

where I can get the REC Infrastrutre Bond Forms and what banks accept these forms in Hyderabad. This is urgent Please.

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Shiv Kukreja March 8, 2012 at 5:14 PM

Hi Mr. Mahesh

REC Infra Bonds issue closed on February 10th. At present, L&T, PFS, PFC & IFCI Infra Bonds are available in the market. I hope you are not confusing REC Infra Bonds with REC Tax-Free Bonds.

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Manas March 9, 2012 at 1:47 PM

Is there any Infrastructure bonds currently open? I missed the deadlines. today is 9th March 2012. Please let me know. Tahnks!

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Manshu March 10, 2012 at 6:41 AM

I believe IFCI’s V series is open currently.

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Shiv Kukreja March 10, 2012 at 9:59 AM

Hi Manas

Currently there are 4 issues available in the market:

L&T (offering 8.70% & closing on March 12th)
PFS (offering 8.93% & closing on March 16th)
PFC (offering 8.43% & closing on March 23rd)
IFCI (offering 8.72% & closing on March 27th)

For more info or to invest in Infrastructure Bonds, Call/SMS 9811797407 (Gurgaon, New Delhi or Noida).

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abhishek garg March 10, 2012 at 11:53 AM

Hi Shiv,

Can I take the infr bond in dependendent father’s name

Regards
abhishek

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Shiv Kukreja March 10, 2012 at 10:41 PM

Hi Mr. Abhishek

Sole/First Applicatnt will get the Tax deduction u/s 80CCF in case of Infra Bonds, irrespective of who pays for it. I dont think there is any check point to stop third party payments in Infra Bonds, like it is there in case of Mutual Funds.

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Aakash Kathal March 10, 2012 at 2:11 PM

SIr,

I would like to know that i have applied for infrstructure Bond in month of March 2012. Therefore allotment of the same will take place in the month of April 2012. So how can i produce the Bond allotment receipt along with Form C submission.

Will undertaken bond be of no use to me, as i am unable to claim the tax rebait against the same. If, there is any other way to claim the same kindy suggest.

Best Regards,
Aakash kathal

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Himanshu Kawatra March 17, 2012 at 10:03 PM

Sir,

I have applied for L&T infra bonds in dec 2011 but have not received my infra bonds till date.
Please let me know the process to track my bonds or process to receive it.

Thanks in advance
Himanshu Kawatra

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Shiv Kukreja March 18, 2012 at 11:07 PM

Hi Mr. Himanshu

You can check the status of L&T Infra Bonds with your application no. through the below pasted links:

http://www.shareproservices.com/appstatus.asp

http://www.shareproservices.com/altadv/alltadv.asp

For further assistance, you need to contact Sharepro Services, the registrar for L&T Bonds.

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ambika March 18, 2012 at 12:08 PM

is any infrastructure bond available in the mkt? i think i miss the opportunity!!!. plz let me know
thanks

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ambika March 18, 2012 at 12:09 PM

is any infrastructure bond available in the mkt? i think i miss the opportunity!!!. plz let me know
plz let me know the best infrasturcture bond.
thanks.

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Shiv Kukreja March 18, 2012 at 11:34 PM

Hi Ambika

Currently there are 4 issues available in the market:

PFS (offering 8.93% & closing on March 27th)
IFCI (offering 8.72% & closing on March 27th)
IDFC (offering 8.43% & closing on March 30th)
PFC (offering 8.43% & closing on March 23rd)

For more info or to invest in Infrastructure Bonds, Contact 9811797407 (Gurgaon, New Delhi or Noida).

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Yogesh Karwa March 22, 2012 at 12:08 PM

Hi,

Will I be able to take deduction u/s 80 ccf in the following scenario?

I have applied for the IDFC Infra bonds in the month of Feb’12. Amount is debited from my saving account, I also have the acknowledgement of application. However I have not received the allotment letter as the allotment will happen in the month of Apr’12.

Can I take the deduction u/s 80 ccf in the FY 2011-12 only for applying the infra bonds without bonds being allotted to me?

Please reply ASAP.

Thanking you in anticipation.

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Shiv Kukreja March 22, 2012 at 8:27 PM

Definitely Yes, you’ll get the deduction.

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Rahul Pal March 23, 2012 at 10:48 AM

Hi Shiv

If i have invested under the cumulative option in the infrastructure bonds,do i need to pay tax on the interest accrued every year, or at the end of the tenor of 10 years i need to pay a capital gains tax in year ten

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Shiv Kukreja March 24, 2012 at 12:13 AM

Hi Rahul

There is no clarity regarding this query. But I’ve my view that one should pay tax only when the interest is actually received, either annually or at the time of exercising the Buyback facility, say after 5 years or when the bonds are redeemed back to the company upon Maturity, say after 10 years.

I’m saying this because many people take these bonds in their Demat A/c. If they sell these bonds in the open market after the lock-in period of 5 years, then they are not liable to pay any tax on the interest amount. In that case, only Capital Gain Tax will be applicable. If you surrender or redeem these bonds back to the company, then it is not a sales transaction and tax is payable on the interest amount.

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Neville Serro March 25, 2012 at 4:41 PM

Hi, I try my best to invest within the 1st quarter of the financial year so that last minute rush is avoided. For the current year I have invested in REC Infra Bonds in January’2012. My question is if I can buy bonds of the same value in the beginning of the first quarter i.e. for the financial year 2012-13.

Awaiting your response at the earliest.

regards,

Neville Serrao

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Shiv Kukreja March 25, 2012 at 9:50 PM

Hi… Firstly, there is a 99.9% probability that these Infra Bonds are not available from the next year onwards as Budget 2012 has not extended this benefit to FY 2012-13. Secondly, these bonds are not available for investment throughout a financial year. In fact, the first issue of FY 2011-12 came in the month of September 2011 and that too failed to collect its target collections.

If you are an Indian, then you are a different kind of person because Indian investors do their tax investments only at the last minute… ;-)… Just Joking… after all even I’m an Indian.

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Shrinath April 4, 2012 at 1:02 PM

I have invested Rs 20,000 in the FY 2010-11. I invested 1,00,000 in LIC and NSC. Hence I claimed Rs 1,20,000 deducted from my income while calculating tax for AY2011-12. However I just received the assement from the tax authorities and they have disallowed Rs 20,000 investment in Infrastructure bonds. Whether this can be availed for Financial year 2011-12 only ?.

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Manshu April 4, 2012 at 3:55 PM

Shrinath – This was available for the last two years so you should have gotten the deduction provided everything was correct. I’m not sure why they disallowed it – which bond specifically did you buy?

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indranil ghosh May 13, 2012 at 4:28 PM

can a urban co*op. bank and dist.central co-op. bank invest 80ccl bond? iin this bond any tds?
if investment what type of tax examption they gate?

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Manshu May 13, 2012 at 5:55 PM

I think you mean 80CCF and not 80CCL bonds, and right now no one can issue them. The provision to issue them was temporary and it doesn’t look like this was extended to this year. We will know more at around September or so when the bonds started to get issued last year.

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Shiv Kukreja May 14, 2012 at 1:52 PM

Hi Indranil & Hi Manshu

Finance Ministry has already confirmed that Infra Bonds exemption wont be extended to this FY 2012-13. Moreover, only Individuals & HUFs were eligible to invest in these 80CCF bonds.

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Manshu May 14, 2012 at 5:09 PM

Thanks Shiv.

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chandrahas tiwari October 13, 2012 at 6:23 PM

my brother purchased REC Infra bonds in 2011.He expired on 15.9.2012.What will happen in this case.Can it be transferred to the nominee or to wait lock in period i.e. 5 years in this case.Will you please make clarification?

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Shiv Kukreja October 14, 2012 at 11:25 PM

Please check these lines. I have taken these lines from the Information Memorandum of REC Infra Bonds 2011 – “To avail the benefit under Section 80CCF of the Income Tax Act, 1961, the investment made in the Bonds needs to be held for a minimum period of at least five years from the deemed date of allotment. Hence, the Bonds are transferable only after five years. However, transmission of the Bonds to the legal heirs in case of death of the Bondholder / Beneficiary to the Bonds is allowed.”

“TRANSMISSION/SUCCESSION
In the event of demise of sole/first holder of the bonds, the company will recognise the executer or administrator of the deceased bondholders, or the holder of succession certificate or other legal representative as having title to the bonds only if such executor or administrator obtains and produces probate or letter of administration or is the holder of the succession certificate or the legal representation, as the case may be, from an appropriate court in India.”

Source: http://www.recindia.nic.in/download/REC_infra_bonds_IM.pdf

Based on this info, I think the lock-in period of 5 years will stand but you can definitely get the bonds transferred in the name of the legal heir.

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S.Kavitha June 25, 2013 at 12:14 PM

Hi,
I have purchased a 80CCF bond on Jan 2012 and availed the tax benefits. But this year in 2013 I have not received any interest benefit from the bond. Please let me know why I have not received and how to follow for that.

Thanks,
Kavitha

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PIYUSH CHANDRA January 28, 2015 at 12:45 PM

please tell me the procedure for redemption of 80ccf IIFC bonds

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Shiv Kukreja January 29, 2015 at 12:04 PM

Hi Piyush,
You need to contact the Registrar of IIFC to understand the redemption process.

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Mayur October 24, 2015 at 5:24 PM

I have got a letter from IFCI and they are ready to buy back the bonds.

Would it be the right time to sell.

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S P DASH April 22, 2016 at 2:38 PM

Sir, I had puchased bonds of IDFC in 2011 for Rs.20,000/-and was getting interest annually. It is in Demat form. Now, it is showing in free hold. If I do not sell, Shall I get the Annual Interest as before?

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