Save taxes with IDFC Infrastructure Bonds 2011

IDFC_infrastructure_bondIDFC is once again out with infrastructure bonds – IDFC Tax Saving Long Term Infrastructure Bonds. You can invest in the same upto Rs. 20,000 to save tax. Below are the details of the same.

These bonds have got the highest credit rating of (ICRA) AAA by ICRA and Fitch AAA (ind) by Fitch.

Issue opens: November 21, 2011

Issue closes: December 16, 2011

Scheme Features: IDFC Infrastructure Bonds 2011

Series12
Face Value 5,000 per Bond
Minimum number of bonds per applicationTwo bonds and in multiples of one bond thereafter.

For the purpose of fulfilling the requirement of minimum subscription of two bonds, an applicant may choose to apply for two bonds of the same or different series.

Interest paymentAnnualCumulative
Interest  Rate9% p.a.N.A.
Maturity Amount 5,000 11,840
Maturity10 years from the deemed date of allotment
Yield on Maturity9%9% compounded annually
Buyback FacilityYes
Yield on Buyback9%9% compounded annually
Buyback DateDate following 5 years and one day from the deemed date of allotment
Buyback Amount 5,000 per bond 7,695 per bond

 

Salient Features: IDFC Infrastructure Bonds 2011

  • The bonds don’t attract any TDS in case the investments are in demat form
  • The bonds are available in Demat & Physical form
  • The bonds will be listed on NSE and BSE and can be traded after the 5 year lock-in period
  • Investors can mortgage or pledge these bonds to avail loans after the lock-in period.
  • An investor would need a PAN card to invest in these bonds.
  • The bonds will be issued only to Resident Indian Individuals and HUF
  • An applicant may subscribe to the two series of Bonds offered but the minimum application under each series shall be one bond i.e., 5,000
  • Interest on the Bonds shall be payable on annual or cumulative basis depending on the series selected by the bond holders
  • The interest accrued on the bonds will be credited to the respective bank registered with the demat account through ECS on the due date for interest payment

Should you invest in IDFC Infrastructure bond 2011?

Rate of interest for PPF is 8.6% while in IDFC Bond you can lock-in your investment for 10 years at 9% interest. I think its the right time to invest in IDFC Infrastructure Bonds 2011.

Your returns would depend on the tax bracket you are. For details on the same Click here.

  • If you are in 30% tax bracket your annual return would be 15.6% per annum
  • while for 20% tax bracket your return would be 13% and
  • for 10% tax bracket the returns would be 10.85%

I think its a decent return and its recommended to lock-in in such tax saving instruments at this high interest rate period.

To Conclude:

I suggest everyone in the higher tax bracket to subscribe to the Infrastructure bonds. You may subscribe to this IDFC bond or wait for other institutions to issue these kinds of bonds. But by the end of this financial year you must opt to save tax on additional Rs 20,000!

Distributors:

LEAD MANAGERS 
ICICI Securities LimitedKarvy Investor Services Limited
JM Financial Consultants Private LimitedIDFC Capital Limited
Kotak Mahindra Capital Company Limited
BROKERS TO THE ISSUE 
Almondz Global Securities LimitedKarvy Stock Broking Limited
Bajaj Capital Investor Services LimitedKotak Securities Limited
Enam Securities Private LimitedNJ India Invest Private Limited
Edelweiss Broking LimitedRR Equity Brokers Private Limited
HDFC Securities LimitedSharekhan Limited
IDBI Capital Market Services LimitedSMC Global Securities Limited
JM Financial Services Private LimitedSBI Cap
CO-LEAD MANAGERS 
RR Investor Capital Services Private LimitedBajaj Capital
SMC Capitals
BANKERS 
HDFC Bank Ltd.IndusInd Bank Ltd.
ICICI Bank Ltd.Dhanalakshmi Bank Ltd.
IDBI Bank Ltd.ING Vysya Bank Ltd.
Axis Bank Ltd.Kotak Mahindra Bank

 

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