Thursday, December 8, 2011

IFCI 80ccf Tax Saving Infrastructure Bonds 2011-2012: Review

With the year coming to an end, lot of companies are coming out with tax saving infrastructure bonds. After IDFC and L&T, IFCI had come out with infrastructure bonds few months back which had much lower interest rate. Since the recent issues from different companies have offered much higher interest rate, IFCI has come out with long term infrastructure bonds issue again with the highest interest rate under this category this year so far. This can help save tax on Rs 20,000 under section 80ccf. This is an additional tax saving option that was introduced by government over and above Rs 1 lakh limit under section 80c.

The issue opens on 30 November, 2011 and shall close on 16 January, 2012. The face value of each bond is Rs 5,000.

IFCI offers the highest interest rate among all the companies who have come out with these infrastructure bonds. The company offers 9.09% interest rate for 10 years and 9.16% for 15 years bonds. There is a buyback option after 5 and 7 years. There are 2 options:
- Non-Cumulative: interest is paid annually
- Cumulative: interest is paid along with the principal at the time of maturity. Interest will be reinvested and will earn better return.

These bonds will be listed on BSE. L&T and IDFC offered 9% interest rate so interest offered by IFCI is definitely more and offers  similar level of safety so we would recommend these bonds to investors for investing up to Rs 20,000 so that they can save tax as well as get a better return.


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