Shiv – an independent financial adviser– left a comment yesterday informing me that REC infrastructure bonds are already available for purchase, and I thought I should do a post on this because a lot of people are looking for this information right now.
These bonds are issued with Section 80CCF benefits which means that they will get you reduction in your taxable salary of Rs. 20,000 over and above the Section 80C limit.
I have done a detailed post on Section 80CCF FAQs earlier, so if you’re new to this site or these bonds, it might be a good idea to check that out.
That being said, let’s take a look at some of the features specific to the REC infra bonds.
Open and Close Date
The REC 80CCF bond issue opened on January 12, 2011, and will close on March 28 2011.
Interest Rate
REC will offer two options – one with buyback facility, and the other one without a buyback facility, and the interest rates will differ on those options.
Here is how it will work out.
| Options | With buyback after 5 years | Without buyback: Redeemable in 10 years |
| Interest Rate | 8.00% | 8.10% |
| Interest Payment | Yearly | Yearly |
| Payment Date | 31st March every year | 31st March every year |
| Buyback after | 5/6/7/8/9 years | Not Applicable |
Minimum and Maximum Investment
The bonds have a face value of Rs. 5,000 and the minimum you have to buy is two bonds, so the minimum investment you can do is Rs. 10,000.
There is no limit for the maximum, but since the main benefit of investing in infrastructure bonds is getting the tax break, and the cap on that is Rs. 20,000 – in a way that becomes the upper limit.
You can get more than 8% on your money in shorter time frames in bank fixed deposits these days.
Physical form or only Demat?
REC has an option of physical form along with the Demat option, so even if you don’t have a Demat account you can invest in these forms in the physical form.
Tax Proof for the REC Infrastructure bonds
When you buy the bond it will not be credited to your account immediately, and if you are buying it online you won’t get any documentation that shows you purchased the bond.
This has caused some troubles to people who had to submit tax proof at their work place. I’m not a tax expert but some people here have suggested that when they apply physically (and give their demat account number) – they get a receipt, which has been used for tax proof in their office. So, if possible, check with the people who do your taxes if that receipt will suffice, so that you don’t get into any trouble later on.
Credit Rating of REC
These bonds like other infra bonds before them are unsecured, but REC itself has been graded very well by the rating agencies, and is a Navratna as well.
| AAA / Stable | CRISIL |
| CARE AAA | CARE |
| LAAA | ICRA |
| AAA (IND) | Fitch |
How can you buy REC Infrastructure Bonds?
If you are interested in buying the REC infrastructure bonds, then you will have to fill up the physical form, and submit it to one of the collecting branches.
You will need documents like PAN, address proof, and Demat account proof to submit along with the application form.
This link has got the list of bank branches where you can submit the application form.
You can download the application form here.
Alternately, you can look for an independent financial adviser in your area who can assist you with it, or see if your online trading account allows you to invest in these through their platform or not.
Also read about the IDFC Infrastructure Bond Tranche 2.
Did anyone save the offer document of the REC infra bonds issues in Jan 2011? I need to contact them as I haven’t received any interest from them till today – I am holding the bonds in demat form.
Thank you.
I found it by doing a site search on recindia.nic.in . Here is the document: http://recindia.nic.in/download/rec_infra_bonds_im.pdf
L&T is giving 9% intrest and IFCI is giving 9.09% intrest Then why REC is giving only 8% intrest ?
Ple…..Reply Soon.. 🙂
REC has new bonds with 8.95% interest now Amit – please use that!
L&T is giving 9% intrest and IFCI is giving 9.09% intrest Then why REC is giving only 8% intrest
I Need AGENT FOR BUYING REC INFRA BOND
SANJEEV
9850336098
Hi Sanjeev.. REC Infra Bonds for the current FY are yet to hit the streets, so no agent would be able to help you in your investment.
I HAVE FORWARDED AN APPLICATION FOR REC INFRA BOND ISSUANCE
> ALONG WITH A DD FOR RS 20000/- ON 15.03.2011 BY COURIER TO FANCY BAZAR
> BRANCH of Canara Bank, IT BEING AN AUTHORISED COLLECTION CENTRE FOR
> THE SAME.BUT TILL DATE I HAVE NEITHER RECEIVED A BOND CERTIFICATE, NOR
> ANY ACKNOWLEDGEMENT FROM YOU TO THE FACT THAT THE APPLICATION
> ALONGWITH DD HAS BEEN RECEIVED/PROCESSED.
>
> THIS IS TO REQUEST YOU TO INTIMATE ME THE STATUS .an early
> reply will be highly appreciated.
>
> THANKING YOU.
>
>
>
>
>
> PRADEEP CH SAHASBI, PASSIGHAT BRANCHDT. EAST SEANGARUNACHAL PRADESH.
>
> EMAIL-p-saha@sbi.co.incell no-09402132148/ 0940228071903783-210393
>
>
>
>
i reqiured 20000/ infrasturture bond plz sujest.where invest.
They aren’t open right now, please wait till Nov or so which is when I expect them to open up, and then you can invest in them.
HI THIS IS SRINIVAS PLEASE TELL US A LONG TERM BONDS IF THERE IS A NEW ISSUE FOR INVESTMENT ABOVE ONE CRORE
No, there is no new issue as of now.
Hi Mr. Anil
You can check your application’s status on this link by putting your PAN No.:
http://www.beetalfinancial.com/bond.aspx
Hi,
I have applied for rec-infra bond under section 80ccf on 26.03.11.(appl.no-324251). What is the fate of my application.
-anil
which option is better to invest in buy back or w/o buy back. how can non buy back bonds be redeemed and after how much time ??
thanks ..
I personally prefer the buyback option because the main benefit of these bonds is the tax benefit, so given that – I’d want the redemption to happen as quickly as possible and not mind getting a little less in interest every year.
Thanks a ton……………
if any body required Infrastructure Bonds processing, please call me at 9241545354 (for bangalore only).
INCOME TAX REBATE U/S 80 G i.e. DONATION TO APPROVED INSTITUTIONS IS GRANTED ON WHICH AMOUNT ? MEANS BEFORE 80C OR AFTER 80 C ?
That’s independent of 80C.
sir,
Ihaveinvested Rs 20,000.00 in L&T infracture bond. After deduction of standard deduction of Rs1.60Lacs and investment(excluding L&T Bond) of Rs1.00 Lacs .I am in the tax slab of Rs1.60lacs toRs 5.00lacs. How much taxexemption I shall get on this infra bond of Rs 20,000?Please inform through my Email add.
In that slab the tax rate is 10%, so you will get exemption of slightly over Rs. 2,000 because of this infra investment.
Hello Guys,
Great Job Shiv and Manshu,
I have a query regarding the same issue talking above post, Do I need to have DMAT accout for sure, as I have returned from UAE recently and joined in job in INDIA , I am planning to have Infrastructure bonds for my next financial year, Which month will be the good time , and as per the posts above L&T and IIFCL seems to be better option for investing.
Suggest me for more info on the same.
Regards
Bairam
Hi Mr. Bairam Sunil Kumar.. Demat is not mandatory for Tax Saving Infra Bonds Investment but preferable & advisable if you trade in shares also.. The best time to do these investments is when you think the interest rates are around their peak levels like in the current scenario, you’ve spare money with you & find no better alternate investments and when you are sure that you require to invest in these bonds to save your taxes.. 🙂
Finally I think L&T Infra Bonds and PFC Infra Bonds are offering the best interest rates at present (both @8.3% with 5-years lock-in)..
To invest in L&T Infrastructure Bonds /PFC Infrastructure Bonds / IDFC Infrastructure Bonds or for any other info, Call/SMS 9811797407 (Delhi, Gurgaon & Noida)
invest in IDFC infrastructure bonds.
interest rate of 8.25%
tax deduction u/s 80 CCF
For details & subscription in PUNE contact me on 9762847432 (Rishiraj)
L &T INFRASTRUCTURE BONDS – SECTION 80 CCF
TAX EXEMPTION…
PEOPLE FROM PUNE CAN CONTACT ON 9762847432 ( RISHIRAJ)
HURRY!!! ISSUE CLOSES 7TH MARCH 2011.
please help me to understand the Indian income tax structure.
That’s really a very vast subject, and one that’s not really going to be covered on a blog like OneMint.
Hi Shiv,
Thanks for the information.
Manshu,
Cant we apply online for L&T infra bonds? Do you have any information wrt same?
Yes you can – I never got around to doing a post on the second tranche of L&T and IIFCL. Will try and get them done soon.
What about IIFCL bonds – they are open too, but nobody seems to be talking about them..
I got too busy with other things and never got around to writing about them, but I will do a post on them shortly. I don’t know about others….I mean you’re saying that it doesn’t get as much media coverage or what exactly?