IIFCL Infrastructure Bonds Issue

by Manshu on February 20, 2011

in Investments

IIFCL is also offering infrastructure bonds under section 80CCF, and their issue started on the 4th February and will close on the 4th of March.

IIFCL Infrastructure bonds have a face value of Rs. 1,000 and the minimum investment needed in them is Rs. 5,000. The bonds can be issued in both physical and Demat format, and the issue has been rated AAA / Stable by CRISIL and CARE AAA by CARE, which indicates their highest safety rating.

These are secured bonds, and have a lock in period of 5 years after which they will be listed on the BSE.

No TDS will be deducted on bonds on Demat form, and for the bonds in paper form no TDS will be deducted if the interest is less than Rs. 2,500.

Here are some details of the IIFCL Infrastructure bonds.

IIFCL Infrastructure Bonds

IIFCL Infrastructure Bonds

As you can see from the above table there are 4 series, and every series has the buyback option on it as well. The buyback means that even though the maturity period of the bond may be 10 or 15 years, you can get your principal back earlier than that.

In series 1 and 2 – you can ask the company to buyback these bonds after 5 years whereas if you opt for series 3 or 4  – you can ask the company to buyback the bonds after 7 years.

Since the main benefit of these 80CCF bonds is tax saving, I’m of the opinion that the series with the shorter tenure makes more sense, but this is ultimately your decision and you have to see what makes most sense for your finances.

One more thing I’d like to emphasize is that these 80CCF bonds are all under the cumulative limit of Rs. 20,000. If you have already invested in some other infrastructure bond then there is no point in investing in this again since you won’t get the additional tax saving.

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