Hi
I need to buy an infrastructure bond for tax deduction u/s 80 ccf.
What are the option i have now.
I have to buy the same before the end of this month
Punit Todi (Associate Finance) (40 Points)
24 March 2011Hi
I need to buy an infrastructure bond for tax deduction u/s 80 ccf.
What are the option i have now.
I have to buy the same before the end of this month
Lalit Kumar
(Vice President )
(2213 Points)
Replied 24 March 2011
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.
Ramalingam K
(Founder & Director - Holistic Investment Planners (P) Limited)
(21077 Points)
Replied 09 May 2014
How to choose the best infrastructure bonds this tax-saving season
Infrastructure bonds are making a splash these days just in time before the end of the tax-saving season in March. Currently, issues are open for subscripttion from Infrastructure Finance Corporation of India (IFCI), Rural Electrification Corporation (REC), PTC India Financial Services and SREI Infrastructure Finance. IDFC has already raised Rs 533 crore through its issue of infrastructure bonds which closed for subscripttion in December 2011.
https://articles.economictimes.indiatimes.com/2012-01-10/news/30611804_1_section-80ccf-infrastructure-bonds-demat-account
With Regards,
Ramalingam,
Director,Chief Financial Planner.
HOLISTIC INVESTMENT PLANNERS PRIVATE LTD
“Best Performing Financial Advisor Award” Winners from CNBC TV18
Website: www.holisticinvestment.in
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