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High Tax Bracket Investors Should Invest In Infrastructure Bonds

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It is time to start working on your tax sayings. With just 2 months away from March 31, it is time to execute some action. Infrastructure bonds are gaining popularity as a tax saving instrument because of the recently introduced tax benefit under 80CCF.

Infrastructure Bonds
Infrastructure Bonds

Guide on Infrastructure Bonds

Under, this Section of the Income Tax Act, an Investor can seek tax relief on the investment amount up to Rs 20,000 in the long term infrastructure bonds After a spate of infrastructure bond issuances such as IDFC, IFCI, EEC, PFC, L&T Infrastructure Finance has launched a long term Infrastructure bond Issue. The earlier bond issuances were priced in the range of 9-98% per annum. L&T Infrastructure Finance is offering 8.70% on its bonds.

Should you invest in such bonds?


It definitely makes sense to invest in these bonds, if you have not Invested in infrastructure bonds as yet These bonds are priced lower than Inc earlier bond issuances reflecting a possibility of rate cut in near future. If there is no liquidity pressure you should opt torte cumulative option for a maximum period of 10 years, under which the interest rate is compounded annually,” says Pankaj Math pal, certified financial planner.

Investors having a dem. account can take purchase the bonds materialized form and trade after the minimum lock in period, which is 5 years.

“Investing in Infrastructure Bonds will be useful most to those in Me highest tax bracket as the tax savings potential is the highest. Even for 209, tax slab it is fine For those in 10% tax slab, is not really that lucrative and not recommended,” says Suresh Savagean, Certified Financial Planner Ladder 7 Financial Advisories and free stock tips provider.

For choosing the bond one needs to see the rating assigned to the bond You have to choose the correct tenure ( 10/15 years ), based on which they will have the option for buy back after 5/7 years Investor needs to choose yearly interest paying or cumulative options based on their requirement for regular cashflows,” says Savagean.

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