Tax-saving Infra Bonds: Here's why to go for it NOW
The interest rates that can be offered on these bonds cannot be more than the yields prevailing on the relevant Govt. securities at the time of issue. As the market interest rates have increased in the last few months, the present issues are offering about 0.25-0.5% more returns than the issues in the recent past.
January 13, 2012 / 14:11 IST
Many of you would be aware that you can save tax by -
a) investing in certain specified instruments (such as PF, PPF, ELSS, Life insurance, Pension, NSC, 5-year Bank FD, etc.) and/or b) incurring certain specified expenses (such as repayment of home loan principal, tuition fees of up to 2 children, stamp duty/registration of house property).The limit for these put together is Rs.1 lakh, which will be deducted from your taxable income and you will charged tax only on the balance amount. The relevant income tax section is 80C.Further, a couple of years ago, the Finance Minister announced an additional deduction of up to Rs.20,000 provided this amount was invested in notified Infrastructure Bonds. The relevant income tax section for this is 80CCF.Salient Features of Tax-saving Infrastructure Bonds - Infrastructure Bonds are issued at par with a mandatory 5-year lock-in- These bonds usually have tenure of 10-15 years. However, there is a buy-back option after 5 years from the date of allotment, when the investor can redeem his investment- They normally carry two options
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