Infrastructure companies have lined up a slew of tax-saving infrastructure bonds as current financial year is nearing completion.
Infrastructure Development Finance Company (IDFC), Rural Electrification Corporation (REC), L&T Infrastructure Finance and India Infrastructure Finance Company (IIFCL) plan to raise around R5,379 crore in the next two months from these bonds.
Investment in theses bonds enable investors to claim deduction of up to R20,000 in computation of taxable income under the section 80CCF of Income Tax Act, in addition to the deduction of R1 lakh under section 80C.
"This is the right time to launch tax-saving infrastructure funds as people plan to save tax during in February and March," says SK Goel, chairman and managing director, IIFCL, which plans to raise R1,200 crore from infrastructure bonds.IDFC, which raised R471 crore in the first tranche of bonds issued in November 2010, plans to raise R2,929 crore, REC aims R50 crore and L&T Infrastructure Finance plans R309 crore.
Experts say these bonds suit more to persons falling in higher income tax slab of 20% and 30% than in 10 % tax slab.
"Tax payers in lowest tax slab are not left with taxable income after they have availed the deduction of R1 lakh allowed in Section 80C, whereas those in higher tax slab need another option to save tax after they have exercised section 80C," says Vishal Dhawan, a financial planner and founder of Plan Ahead Wealth Advisors.
Companies have kept a minimum investment amount in the range of R5,000- R10,000 and are offering buyback facility, in which companies will purchase these bonds at specified time. The bonds have a lock-in of five years and offer interest rate on annual or on compounded basis depending on the option chosen by the investor.
These bonds can be purchased in demat and physical forms. REC issue will close on March 28, IIFCL on March 4, L&T Infrastructure Finance on March 7, while that of IDFC closed on February 4.