Close on the heels of the IDFC Infrastructure bonds – L&T is also issuing infrastructure bonds beginning October 15th 2010, and closing on November 2 2010.
L&T Bonds: Tax Saving Infrastructure Bonds
These are classified as infrastructure bonds under Section 80 CCF which means that investing in them will reduce your taxable income by Rs. 20,000.
This increases your effective yield because along with the interest you earn on these infrastructure bonds, you save on tax as well.
These bonds are good for a maximum of Rs. 20,000 as far as the tax saving aspect is concerned, so if you buy bonds worth Rs. 30,000 and nothing else, even then the maximum you can reduce from your taxable income is Rs. 20,000 because that is the cap on tax benefits on infrastructure bonds.
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
They also have this cool link on their special website for this bond where you can enter in your contact details and they will contact you and help you.
If any of you do decide to contact them then I am really interested to know your feedback because I tried to get in touch with the numbers given in the IDFC website, and tried at least 10 times to no avail. I’d like to know if this is any better.
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.
Conclusion
These were some salient features of the L&T bond issue, and I hope you found this useful in order to make a decision on whether you want to opt for them or not. Keep in mind that IDFC has a similar issue running, and if you have already applied for that then you won’t get any additional tax benefit (over Rs. 20,000) by applying for this issue as well.
If you have any questions, leave a comment, and the community here will try to answer them for you.
Dear Sir,
I have purchased the L&T Infrastructure Bond by paying Rs 20,000 ( Cheque No: 34166, Dt: 30.10.2010) , which got cleared from my Bank Account on 13/11/2010. Unfortunately, i have misplaced the counterfoil slip of the Application, due to which i don’t have any idea of my application number.
Also, i haven’t received the Soft / Hard (Original) Copy of the Infrastructure Bond till date.
Kindly let me know, what i need to do, to get both “Soft / Hard copy”?…
Please help me…..
I have not received the annual interest on the L&T infra bonds which were purchased by me
during March, 2012. With whom should I take it up for getting the interest amount
I HAVE PURCHASED A BOND FOR RS 20,000/- IN MY L&T FOLIO NO 11518354.BUT I HAVE REFUNDED RS 12000/-BY CHEQUE NO.104651.UNFORTUNATELY MY CHEQUE HAS BEEN EXPIRED DUE TO NOT SUBMITTED IN BANK BY ME AT PROPER TIME.AGAIN I HAVE SEND MY CHEQUE FOR REVALIDATION BUT TILL DATE NOT GET IT.MY MOBILE NO IS 9955018745.
KINDLY SEND ME FRESH CHEQUE.
L&T INFRA BONDS-2011
Dear Sir,
I have purchased the L&T Infrastructure Bond by paying Rs 20,000 (SBI Cheque No: 863419) , which got cleared from my Bank Account . Unfortunately, i have not got my policy bond till date. so plz send my policy bond soon………..
my application number: 15689002
Address- RAMESH CHANDRA PATHAK
CHANDRA KANT NIVAS
INDRA VIHAR COLONY BITHORIYA -1
HALDWANI NAINITAL UTTARAKHAND
PIN NO. 263139
MOB NO: 9758344908
Please sand my bond on my address …………..
i have received a physical L&T Infra bond with mistake in my name. How i can correct this?
sunil deshmukh 9922404877, pune
I have applied for l&T Infracture 2012 bond with application no.11743010 in mid of january 2012 but i have not received my bond certificate yet.
I’m an insurance agent.I wanna sell infrastructure bond of L&T. How can I get this agency???
Ihave bought the L&T infrastucter bond last year but nowI have changed my place of staying from Berhampur to Aska.Can you help me to enter my new address.
i like to buy L & T infrastructre bonds for r.s 20,000 , kindly help me out
N 5 series bond of L&T are available in the open market at about INR 980. How much will be the yield or interest in this case
Hey Ashok – The Edelweiss website is a good place that shows you the yields and everything and is easy to navigate. Here use this link – it shows a yield of 10.84%
http://www.edelweiss.in/Debt/DebtSnapshot.aspx?cn=L_TFINANCE-N5
Dear sir,
i have applied for l&T Infracture 2011 bond with application no.16222244.and app advice no.481685.and folio no.is 10175046. but you entered the wrong address .kindly change the address is given below
nitesh chandra mishra
U-63/21, DLF City, Ph-3 , Gurgaon , HARYANA
Pin Code- 122002
kindely update me
thanks ®ards
nitesh chandra mishra
mobile – 9810280063
I have purchased the L&T Infrastructure Bond in 2010(Application No : 28959675,Allotment advice no: 037982)and i was received allotment advice, but in Allotment advice my name is change from SAMIRMOHAMMED F CHHIPA to AMIRMOHAMMED F CHHIPA . now how to correct the above probleme and till date i have not recived my bond hard copy.
Hi
I have invested 20k in L&T Infra Bonds through ICICI Bank in T.Nagar, Chennai about a Month back. Yet to receive the Bonds. What do i need to do now please?
Dear Sir,
On 25.10.2010 I purchased an Infrastructure Bond for Rs. 20,000.00 for saving Tax. My IPO Application No. 71041726 and transection No. 2610325135, Dt.25.10.2010. Till today I have no document with me that I have purchased a Bond with you neither in hard copy nor in any web site. I should have at least some authentic document.
Please do needfull.
Thanking you.
Yours faithfully,
Chittaranjan Das.
This is not L&T’s website – please talk to your agent or bank to help you out.
hai,
i have applied for l&T Infracture 2011 bond with application no.1108804 . but till date i have not recive aney commmunication from u
kindely update me
thanks ®ards
yoginder singh
mobile 9914499835
This is not the L&T website. Please talk to your agent or broker.
I have invested Rs. 20000/-in Infrastructure Bond 2010A Series, My Application no. is 18142515 , Allotement Advice no. is 003979 but till date i have not recived my bond hard copy.
vandana sharma
Mob. No. 09413116880
SR-3 J N V Rampura Neemuch MP
458118
Hi Ms. Vandana,
Did u opt for Demat form or physical?
Regards,
Himangshu
I want to take L&T infrastructure bonds in New Delhi for Rs. 20,000/- , could you please guide me how to proceed and whom to contact to get the application.
Thanks in advance
Madhusudhan
Please let me know whether L&T is bound to buy back this infrastructure bond after five years if I opt for it. If so, what price they would offer ? i.e, at face value or at discount rate?
Yes there is an option to buyback after 5 or 7 years. If you choose for annual interest then at face value; if you choose cumulative interest then they will cumulate interest at 8.30% per annum and pay that to you.
Ankit: The most direct advantage of having a security listed on an exchange is that it enables a fair price discovery. On listing everyone will have the option of buying the bonds at the prevailing prices, which in turn will be dictated by the then prevailing interest rate enviornment.
But since you are inesting with a long term horizon of 15 years, this should not concern you as your yearly interest payments will be unaffected by any fluctuations in the interest rates.
Please do note, that investment in SBI retail bonds 2011 is not exempt for Tax deduction under any section of the IT act.
For any queries feel free to contact:
Inderjeet Bhatnagar
Goldleaf Investments
(022)6550 4550
Thanks for that response Inderjeet.
Dear Sir,
I have purchased the L&T Infrastructure Bond by paying Rs 20,000 (ICICI Cheque No: 34166, Dt: 30.10.2010) , which got cleared from my Bank Account on 13/11/2010. Unfortunately, i have misplaced the counterfoil slip of the Application, due to which i don’t have any idea of my application number.
Also, i haven’t received the Soft / Hard (Original) Copy of the Infrastructure Bond till date.
Kindly let me know, what i need to do, to get both “Soft / Hard copy”?…
Please help me…..
Regards. N.SIVAKUMAR.
431 C, Pocket 2, Mayur Vihar, Phase – 1, Delhi -110091.