Infrastructure Bonds

Are IRFC and Hudco tax free bonds same as infrastructure bonds

2012-01-29T10:08:00.000-08:00

Looking for investments that will give you benefits under section 80CCF (often termed as infrastructure bonds)? Will investing in IRFC and Hudco bonds give benefits under section 80CCF?

The answer is NO.

These bonds are not covered under section 80CCF. Although, the interest accrued is tax-free if held for the entire maturity period. On the other hand, these bonds can be traded in the market before maturity, but any gains from sale will be treated as capital gain and hence taxable.

The offered rates vary from 8.00% to 8.50% depending on the amount of investment and maturity period.

These bonds can be good option for long term investments with high liquidity. Since interest from FDs is taxable, their interest rates should be ~11.5% to match the returns offered by these bonds.

Hence, these bonds are a viable option for people in higher tax brackets.

In addition to that, the credit rating is also good for both IRCL and Hudco as they are semi goverment organisations.

REC Infrastructure Bonds 2012

2012-01-28T12:30:00.000-08:00

Rural Electrification Corporation Limited (REC), a NAVRATNA Central Public Sector Enterprise under Ministry of Power, was incorporated on July 25, 1969 under the Companies Act 1956. REC a listed Public Sector Enterprise Government of India with a net worth of Rs. 12,789 Crore as on 31.03.11. Its main objective is to finance and promote rural electrification projects all over the country. It provides financial assistance to State Electricity Boards, State Government Departments and Rural Electric Cooperatives for rural electrification projects as are sponsored by them.
REC Limited is issuing series of Long Term Infrastructure Bonds for financial year 2011 – 12. Eligible investors include Resident Indian Individuals (Major) and HUFs through Karta of the HUF . These bonds are Unsecured, Redeemable, Non-Convertible Long Term Infrastructure Bonds, having benefits under section 80 CCF of the Income Tax Act, 1961 for investment upto Rs.20,000/-.

Issue opens: December 19, 2011

Issue closes: February 10, 2012

Issue Structure:

Maturity Period : The Bonds, with a maturity of ten and fifteen years, will be issued in four series.
Series-1: Annual option with 8.95%, payable annually; with a buyback option after 5 years#
Series-2: Cumulative option with 8.95%, compounded annually; with a buyback option after 5 years#

Series-3: Annual option with 9.15%, payable annually; with a buyback option after 7 years#
Series-4: Cumulative option with 9.15%, compounded annually; with a buyback option after 7 years#

#: after expiry of lock in

Website: http://recindia.nic.in/infra.html

Series	1	2
Face Value	Rs 5000 per bond	Rs 5000 per bond
Minimum number of bonds per application	Minimum One + Multiples of One	Minimum One + Multiples of One
Interest payment	Annual	Cumulative
Interest Rate	8.95% p.a.	8.95% p.a.
Maturity Amount per Bond	Rs 5,000	Rs 11,783
Maturity	10 years from the deemed date of allotment	10 years from the deemed date of allotment
Yield on Maturity	8.95%	8.95% compounded annually
Buyback Facility	Yes	Yes
Yield on Buyback	8.95%	8.95% compounded annually
Buyback Date	Date following 5 years and one day from the deemed date of allotment	Date following 5 years and one day from the deemed date of allotment
Buyback Amount	Rs 5,000 per bond at end of 5 years	Rs 7,677 per bond at end of 5 years
Buyback Intimation Period	N.A.	N.A.

Series	3	4
Face Value	Rs 5000 per bond	Rs 5000 per bond
Minimum number of bonds per application	Minimum One + Multiples of One	Minimum One + Multiples of One
Interest payment	Annual	Cumulative
Interest Rate	9.15% p.a.	9.15% p.a.
Maturity Amount per Bond	Rs 5,000	Rs 18,592
Maturity	15 years from the deemed date of allotment	15 years from the deemed date of allotment
Yield on Maturity	9.15%	9.15% compounded annually
Buyback Facility	Yes	Yes
Yield on Buyback	9.15%	9.15% compounded annually
Buyback Date	Date following 7 years and one day from the deemed date of allotment	Date following 7 years and one day from the deemed date of allotment
Buyback Amount	Rs 5,000 per bond at end of 7 years	Rs 9,231 per bond at end of 7 years
Buyback Intimation Period	N.A.	N.A.

[Source: http://recindia.nic.in]

IFCI Infrastructure Bonds 2012

2012-01-28T12:06:00.000-08:00

IFCI Limited is issuing its fourth series of Long Term Infrastructure Bonds for financial year 2011 – 12. Eligible investors include Resident Indian Individuals (Major) and HUFs through Karta of the HUF . These bonds are Unsecured, Redeemable, Non-Convertible Long Term Infrastructure Bonds - Series IV, having benefits under section 80 CCF of the Income Tax Act, 1961 for investment upto Rs.20,000/-. These bonds are 'BWR AA-' by Brickwork Ratings India Pvt. Limited CARE 'A ' by CARE Ratings (Credit Analysis & Research Ltd.) 'LA' by ICRA Limited

Issue opens: November 30, 2011

Issue closes: February 08, 2012 (Extended from January 16, 2012)

Issue Structure:

Maturity Period : The Bonds, with a maturity of ten and fifteen years, will be issued in four series.
Series-1: Annual option with 9.09%, payable annually; with a buyback option after 5 or 7 years#
Series-2: Cumulative option with 9.09%, compounded annually; with a buyback option after 5 or 7 years#

Series-3: Annual option with 9.16%, payable annually; with a buyback option after 5 or 10 years#
Series-4: Cumulative option with 9.16%, compounded annually; with a buyback option after 5 or 10 years#

#: after expiry of lock in

Website: http://www.ifciltd.com

Series	1	2
Face Value	Rs 5000 per bond	Rs 5000 per bond
Minimum number of bonds per application	Minimum One + Multiples of One	Minimum One + Multiples of One
Interest payment	Annual	Cumulative
Interest Rate	9.09% p.a.	9.09% p.a.
Maturity Amount per Bond	Rs 5,000	Rs 11,935
Maturity	10 years from the deemed date of allotment	10 years from the deemed date of allotment
Yield on Maturity	9.09%	9.09% compounded annually
Buyback Facility	Yes	Yes
Yield on Buyback	9.09%	9.09% compounded annually
Buyback Date	Date following 5 years and one day/7 years and one day from the deemed date of allotment	Date following 5 years and one day/7 years and one day from the deemed date of allotment
Buyback Amount	Rs 5,000 per bond at end of 5 years / Rs 5,000 per bond at end of 7 years	Rs 7,725 per bond at end of 5 years / Rs 9,194 per bond at end of 7 years
Buyback Intimation Period	September 15 to November 14 of Calender years 2016 and 2018	September 15 to November 14 of Calender years 2016 and 2018

Series	3	4
Face Value	Rs 5000 per bond	Rs 5000 per bond
Minimum number of bonds per application	Minimum One + Multiples of One	Minimum One + Multiples of One
Interest payment	Annual	Cumulative
Interest Rate	9.16% p.a.	9.16% p.a.
Maturity Amount per Bond	Rs 5,000	Rs 18,618
Maturity	15 years from the deemed date of allotment	15 years from the deemed date of allotment
Yield on Maturity	9.16%	9.16% compounded annually
Buyback Facility	Yes	Yes
Yield on Buyback	9.16%	9.16% compounded annually
Buyback Date	Date following 5 years and one day/10 years and one day from the deemed date of allotment	Date following 5 years and one day/10 years and one day from the deemed date of allotment
Buyback Amount	Rs 5,000 per bond at end of 5 years / Rs 5,000 per bond at end of 10 years	Rs 7,750 per bond at end of 5 years / Rs 12,012 per bond at end of 10 years
Buyback Intimation Period	September 15 to November 14 of Calender years 2016 and 2021	September 15 to November 14 of Calender years 2016 and 2021

[Source: http://www.ifciltd.com]

L & T Infrastructure Bonds 2012

2012-01-28T10:15:00.000-08:00

L&T Infra is proud to bring to you, for the second year running, the Long term Infrastructure Bonds. These tax-saving bonds let you invest indirectly on a long term basis, in infrastructure projects across the country and aid in the growth of India. By investing in L&T Infra 2012A Bond Series, investors can save tax and earn an annual interest rate of 8.70%. The 2012A series provides investors buyback options at the end of 5 years and 7 years. In addition to this, 2012A Bond Series provides investors the option of holding the bonds in Physical or Demat form.

Issue opens: January 10, 2012

Issue closes: February 11, 2012

Issue Structure:

Maturity Period : The Bonds, with a maturity of ten years, will be issued in two series.
Series-1: Annual option with 8.70%, payable annually; with a buyback option after 5 or 7 years#
Series-2: Cumulative option with 8.70%, compounded annually; with a buyback option after 5 or 7 years#

#: after expiry of lock in

Website: http://www.ltinfrabond.com/

Series	1	2
Face Value	Rs 1000 per bond	Rs 1000 per bond
Minimum number of bonds per application	Minimum Five + Multiples of One	Minimum Five + Multiples of One
Interest payment	Annual	Cumulative
Interest Rate	8.70% p.a.	8.70% p.a.
Maturity Amount per Bond	Rs 1,000	Rs 2,303.01
Maturity	10 years from the deemed date of allotment	10 years from the deemed date of allotment
Yield on Maturity	8.70%	8.70% compounded annually
Buyback Facility	Yes	Yes
Yield on Buyback	8.70%	8.70% compounded annually
Buyback Date	Date following 5 years and one day/7 years and one day from the deemed date of allotment	Date following 5 years and one day/7 years and one day from the deemed date of allotment
Buyback Amount	Rs 1,000 per bond at end of 5 years / Rs 1,000 per bond at end of 7 years	Rs 1,517.57 per bond at end of 5 years / Rs 1,793.11 per bond at end of 7 years
Buyback Intimation Period	The period beginning not before six months prior to the buyback date and ending not later than three months prior to the buyback date	The period beginning not before six months prior to the buyback date and ending not later than three months prior to the buyback date

[Source: http://www.ltinfrabond.com/ ]

IDFC Infrastructure Bonds 2012

2012-01-28T09:14:00.000-08:00

IDFC has come up with its second tranche of Long Term Infrastructure Bonds for financial year 2011 – 12. These Bonds would be for a period of ten year. The company has offered an option to buyback the bonds from the investors at the end of five years. These bonds have got the highest credit rating of (ICRA) AAA by ICRA and Fitch AAA(ind) by Fitch.

Issue opens: January 11, 2012

Issue closes: February 25, 2012

Issue Structure:

The Bonds, with a maturity of ten years, will be issued in two series.
Series-1: Carry a 8.70% coupon, payable annually; with a buyback option#
Series-2: Cumulative option, 8.70% coupon, compounded annually; with a buyback option#

#: after expiry of lock in

Website: http://www.idfc.com/infrastructure_bond/

Series	1	2
Face Value	Rs 5000 per bond	Rs 5000 per bond
Minimum number of bonds per application	Minimum Two + Multiples of One	Minimum Two + Multiples of One
Interest payment	Annual	Cumulative
Interest Rate	8.70% p.a.	N.A.
Maturity Amount per Bond	Rs 5,000	Rs 11,515
Maturity	10 years from the deemed date of allotment	10 years from the deemed date of allotment
Yield on Maturity	8.70%	8.70% compounded annually
Buyback Facility	Yes	Yes
Yield on Buyback	8.70%	8.70% compounded annually
Buyback Date	Date following 5 years and one day from the deemed date of allotment	Date following 5 years and one day from the deemed date of allotment
Buyback Amount	Rs 5,000 per bond	Rs 7,590 per bond
Buyback Intimation Period	The period beginning not before nine months prior to the buyback date and ending not later than six months prior to the buyback date	The period beginning not before nine months prior to the buyback date and ending not later than six months prior to the buyback date

[Source: www.idfc.com]

Overview

2012-01-28T08:13:00.000-08:00

What are infrastructure bonds?
To channelize long term retail flows into the Infrastructure sector, the Government of India had introduced Section 80CCF under the Income Tax Act, 1961 (‘the Act’). This section provides for an income tax deduction for an individual investor who subscribes in the Long-Term Infrastructure Bonds (‘Bonds’), issued by certain financial institutions.

Presently, individual investors have various options to invest upto Rs 1 lakh into various instruments such as PPF, Insurance, ELSS etc as allowed under sections 80C, 80CCC and 80CCD of the Act.

An investment in infrastructure bonds under Section 80CCF is an additional window to save tax upto Rs 20,000, over and above the Rs 1 lakh limit already available.

[Source:http://www.idfc.com]