IFCI Infrastructure Bonds: Tax Saving Bonds under Section 80 CCF

by Manshu on November 23, 2010

in Fixed Deposits

Also read about the REC Infrastructure bonds here or the IDFC Infrastructure Bonds Tranche 2 here.

Update: There has been a change in terms, and you can now invest in these bonds in physical form also. Here is the link to relevant IFCI page.

The issue has been extended till January 12 2011

The IFCI Infrastructure bonds are the latest infrastructure bonds to be issued with the 80CCF benefits, and are the second tranche from IFCI, which issued them earlier this year as well.

The IFCI bonds are issued with section 80CCF benefits which means that they will get you a tax benefit of reducing your taxable income over and above the Rs. 100,000 under Section 80C with a cap of Rs.20,000.

The issue has been rated “BWR AA” by “BRICKWORK RATINGS INDIA PVT LIMITED” which means that they are rated as instruments with high credit quality.

IFCI Infra Bond

IFCI Infra Bond

Here are some other details about them.

IFCI Infra Bond Options

There are 4 series that you can choose from with a combination of getting interest paid annually, cumulatively, and having a buyback or not.

Here are the details of the 4 series.

Options I

Buyback &

Non – Cumulative

II

Buyback &

Cumulative

III

Non Buyback &

Non – Cumulative

IV

Non – Buyback &

Cumulative

Face Value Rs. 5,000 Rs. 5,000 Rs. 5,000 Rs. 5,000
Buy Back Option Yes Yes No No
Coupon 8.00% per annum 8.00% compounded annually 8.25% 8.25% to be compounded annually
Redemption Amount Rs. 5.000 Rs. 10,795 Rs. 5,000 Rs. 11,047
Buyback allowed after 5 years 5 years NA NA

As you probably noticed IFCI didn’t show yields in the same manner as L&T and IDFC, where they took the tax benefits based on various slabs and showed yields at different tax slabs and interest payments. This is probably a good idea given the various limitations of the way those yields were calculated.

How does the IFCI infrastructure bond buyback option work?

At the time of selecting a series you have to select either series 1 or series 2, which allow the buyback after 5 years lock in period. To exercise the buyback you have to write to IFCI to request it, and this has to be done in the month of November for the year when you want to exercise the buyback.

Open and Close Date of the IFCI Infra Bond

Opening date of the issue: November 16th, 2010 and Closing date of the Issue: December 31st ,2010. They can close earlier as well if their entire demand is met.

Is a Demat account necessary to apply for the IFCI Infra Bond?

Yes, right now it is necessary to have a demat account to apply for these bonds as they won’t be issued in physical format. Even the IDFC bonds started out as Demat only, and were later on changed to allow physical forms also. The target sum to be raised by IFCI bonds are much lesser than the IDFC ones, so they might not feel the need to change and include the physical format as well.

Will tax be deducted at source from the interest payment?

These IFCI 80CCF bonds will not attract TDS, however the interest itself is taxable at your hands. So, the bonds don’t attract TDS, but it doesn’t mean they are tax free.

Will the bonds list in a stock exchange?

Yes, IFCI plans to list these bonds on the Bombay Stock Exchange (BSE), but from reading the information memorandum it seems to me that you can only sell these bonds after the lock in period of 5 years.

Can NRIs invest in the IFCI Infrastructure bonds?

NRI customers are not eligible to apply for the issue.

What if you have already bought another infrastructure bond?

If you have already bought another infrastructure bond, and exhausted the limit of Rs. 20,000 then you won’t get any further tax benefit by buying this bond. There are also several banks that offer 8% interest for terms less than 5 years, so you won’t get much value out of locking your money in this instrument for 5 years.

How can you buy the IFCI infrastructure bonds?

You can buy these bonds through your broker like ICICI Direct, or can submit an application form in one of the bank branches that are accepting them. The information memorandum lists down a large number of HDFC bank branches so you can go to one near your house, and they might be selling the bonds or can at least tell you where you will get them.

Should you wait for another issue?

This issue is 50 basis points, or half a percentage higher than similar L&T bonds issued earlier, and reader Amit Khandelia actually left a comment about LIC coming up with a future issue, and possibly even offering term insurance free with their offer.

IDFC has also indicated interest in coming up with a future issue, so they might come up with another issue too.

The advantage with waiting is that you may get a slightly higher interest rate, maybe half a percentage or one percentage more, but as I said earlier if you’re able to wait and get a bond which offers a percentage higher, and you invest the maximum Rs. 20,000 in it – that means an additional 200 bucks extra in a year; what is that worth to you? How many hours of Googling and speculating is it really worth?

The advantage of getting it now is that you can get this one thing done with, and have plenty of time to receive the certificates for tax proofs or whatever else you need.

This is a personal decision really, but something worth keeping in mind the next time you speculate on whether you should wait or go ahead with it.

Please leave a comment if you have any questions or observations.

{ 23 comments… read them below or add one }

Balwada April 9, 2011 at 8:24 am

I have applied for IFCI INFRA BOND S-II : IFCBON on 30/12/2010 vide application No 3707090 for Rs 20,000/-, I have yet to receive the physical certificate.

Reply

bessy May 12, 2011 at 9:51 am

i applied for the bond on 30/12/2010but i have not received the physical form of bond till yet and presently my address has been changed kindly look into this matter.
BESSY SAJI
form no.-558881
date-30/12/2010
application for 4bonds Rs-20,000
add. SB-34 SOPHIA APPTS ABHAY KHAND-IV INDIRAPURAM,GZB.

Reply

Shiv Kukreja May 13, 2011 at 11:13 am

Here is the link to check the status of your applications:

http://www.beetalfinancial.com/bond.aspx

Call Beetal at: 011 – 29961281/82/83
Mail Beetal at: beetal@beetalfinancial.com

Reply

smt.RAJANI TRIVIDI October 16, 2011 at 9:53 pm

My address with area post office pin code ….. Smt.Rajani Trivedi w/oShailendra kumar Trivedi, ADDRESS-c/o U.N.Tiwari, K-10,KAZIKHEDA,LAL BANGLA,KANPUR.
Pincode-2o8007.(UTTAR PRADESH )

Reply

Kranti December 29, 2011 at 7:44 pm

Hi, I have already invested in Infrastructure Bond last year which takes care of tax deduction. Do I need to invest this year as well for benefit?

Reply

Manshu December 29, 2011 at 9:21 pm

Yes, the deduction you got was for last year, so if you’re interested in getting a deduction this year you will have to invest again.

Reply

urkulkarni February 2, 2012 at 12:54 pm

pl inform me reg allotment of bond.my applicationno 226383

Reply

dinesh kumar rao February 9, 2012 at 10:23 am

Sir,
i have applied for IFCI Infracture 2012 bond with application no.1800764 . but till date i have not recive aney commmunication from u
kindely update me
thanks ®ards
dinesh kumar rao
mobile 08298860930

INDIRA GANDHI NATIONAL OPEN UNIVERSITY
PATNA (BIHAR)

Reply

V.Ramadoss February 17, 2012 at 3:21 pm

I have invested in the IFCI long term Infrastructure Bonds – series II last year 7’th Feb 2011. Shall any one convey that they have paid the annual intrest in what mode?.

Reply

Shailendra Kumar Yadav February 28, 2012 at 8:21 am

Sir,
I have applied for IFCI Infracture 2012 bond with application no.263613 on 02.02.2012 through my d-mat a/c but till date I have niether recieve any commmunication from you nor any proof to submit for income tax rebate.
Kindly update on my e-mail.
Thanks & regards.
Shailendra Kumar Yadav
Mobile.09535303841

Reply

abhinav sexana April 16, 2012 at 5:47 pm

I had applied for 12 IFCI Bonds vide application no 1589596, 1580281, 1580377,1589595.
I have not recd the bonds nor any communication in this regard. Pl confirm immediately . what has to be done

Reply

SANJAY KUMAR SINHA April 21, 2012 at 3:50 pm

I had applied for 04 (Rs 20000) IFCI long term infrastructure Bonds vide application no 52822 by SBI cheque 061949 dated 06 feb 12 from coimbatore I have not recd the bonds nor any communication in this regard. Pl confirm immediately . what has to be done, MY CONTACT NO 8940381920

Reply

Manshu April 22, 2012 at 8:17 pm

I had bought a shirt last week which I was not able to return to the store – can you confirm immediately what I should do to get this shirt returned?

Reply

GUMAPLLA BALAKRISHNA May 25, 2012 at 3:02 pm

I applied IFCI infrastructure bonds series-II in 2011, but bonds were alloted, but till date interest was receive, which mode the interest was sent. The following are the particulars for verification.

client id:10053388

DP no.IN300610.

ISIN NO.INE039A09MU6

Reply

GUMAPLLA BALAKRISHNA May 26, 2012 at 9:06 pm

I applied IFCI infrastructure bonds series-IIin 2011, but bonds were. . alloted, but till date
interest was not received, which mode the interest will be sending. Please inform the position.
The following are the particulars for verification.

Client id ::10053388.

DP No. IN300610.

ISIN NO.INE039A09MU6.

Please reply immediately.

Reply

Manshu May 30, 2012 at 5:24 am

This is not the website of IFCI….is that too hard to understand? Look at the url of this post, look at the comments that people have posted before you, read the post. Contact your agent or whoever sold you this.

Reply

GANESWAR SAHU June 22, 2012 at 2:36 pm

Dear Sir,
Last year I have purchased 04 no ob Infra bonds bearing Application no 357657 & Reference no 143637,ref.ord.no/rRI .No 15211,but date i have received any bond or any papaer from IFCI.
Pls let me where shall I get this paper?
Ganeswar Sahu,
Mob-09049527242,
Mail Id-ganeswars15@gmail.com

Reply

PARTHA SAHA June 26, 2012 at 5:36 pm

I HAVE INVESTED Rs 20,000/- IN THE TAX SAVER LONG TERM INFRA STRUCTURE

BOND ON 9TH MARCH 2012 VIDE FORM NO. 1710167, BROKER CODE KISL, SUB BROKER

CODE 902818 ( FOR THE PHYSICAL FORM ) , BUT I HAVE NEITHER RECVD. THE

CERTIFICATE NOR ANY COMMUNICATION . PLEASE UPDATE ON MY E MAIL.

Reply

VITTHAL DIGAMBAR GOLESAR June 30, 2012 at 10:45 am

R/sir,
I have invested in ifci infra bonds series II, my id/folio no is 2141810. I want to change my registerd address for the same bond for future correspondence, as I am transferred from Nandgaon Dist; Nashik to Sinnar Dist : Nashik. Please , guide the procedure for change in the address
Thanking You
Yours
V.D.Golesar

Reply

d rajani September 20, 2012 at 6:30 pm

sir,
I have invested 20,000/- in ifciltd, on 21/3/2012through sbi ,bheemunipatnam cheque no.020816.but i didnot get any bond and any response .i already gave mail with details. but i didnot get any communication. please inform through mail.
mail id:
giduturisrinivasarao@yahoo.co.in

Reply

Fun With Logic February 18, 2013 at 3:28 pm

What is the date of getting interest payment for this bond?

Reply

shridhar chandrakesari April 8, 2013 at 6:10 pm

i have a ifci infrabond 2011-2012,amount 20000/-.i want to know the status of the bond.please reply as early as possible.No is 1724763.

rgds
sridhar

Reply

anupam basu April 16, 2013 at 7:01 pm

with regards to IFCI 8.25 310121 series IV
Why does the value show as zero in your DP ID? when the paid up value is 5000?

Reply

Leave a Comment

Previous post:

Next post: