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Tax Saving Infrastructure Bonds

If you have often felt that the Rs 1 lakh income-tax deduction limit is a constraint on your tax-saving abilities, then Tax Saving Infrastructure Bonds is the solution to your dilemma.

Tax Saving Infrastructure Bonds provide another investment option when it comes to tax saving solutions. These bonds are issued by Non-Banking Financial Companies (NBFCs) with an objective to procure funds to invest in government infrastructure projects. The issuing company acts as a facilitator to finance projects with a long gestation period. The returns from these bonds do not exceed the yield on 10-year government securities.

The maturity of these bonds ranges between 10 to 15 years with an option to buy-back after a lock-in of 5years. These bonds are listed on stock exchange either NSE or BSE that provides you with an option to exit after the lock-in period.

Benefits of Investing:

Additional Tax benefits available for investments made up to Rs 20,000/- under section 80CCF of Income Tax Act, 1961. However. interest Income on the Bonds is taxable
Option of holding bonds in 'Demat Form' makes your investments easy to handle & monitor
Listing on exchange like NSE OR BSE provides liquidity to your investments after the lockin period
Low risk of default, since issuing companies enjoy higher credit rating
Ratings of issues by agencies like CARE, FITCH, CRISIL, ICRA enables you to assess the quality of instruments

Other Tax-Saving Options:

As per the newly introduced Section 80-CCG, RGESS scheme is available only to a "New Retail Investor" on investments in the 'Eligible Securities' and offering tax exemption up to Rs. 25,000.

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