Friends,
The last date has been extended for the investment U/S 80- CCF in infrastructure bonds of IDCF. Infrastructure Development Finance Company Limited (IDFC) has launched a Public Issue of Long Term Infrastructure Bonds of face value of Rs. 5,000 each, in the nature of secured, redeemable, non-convertible debentures, having benefits under section 80 CCF of the Income Tax Act, 1961 (the "Bonds").
The Issue is for an amount not exceeding Rs. 34,000 million for the financial year 2010 - 2011. These bonds have a rating of "LAAA" (ICRA) which indicates stable outlook and is the highest credit quality rating assigned by ICRA.
What are infrastructure bonds?
What are infrastructure bonds?
In 2010, the government introduced a new section 80CCF under the income tax act to provide for income tax deductions for subscription in long-term Infrastructure Bonds. These bonds offer an additional window of tax deduction of investments up to Rs. 20,000 for the financial year 2010-11. This deduction is over and above the Rs 1 lakh deduction available under sections 80C, 80CCC and 80CCD read with section 80CCE. Infrastructure bonds help in intermediating the retail investor's savings into infrastructure sector directly.
Long term infrastructure Bonds by IDFC
The issue of Infrastructure bonds by IDFC is the first public issue of Long-term infrastructure bonds. These bonds have got a very high rating of LAAA by rating agency ICRA.
Issue Opens: September 30, 2010
Issue Closes: October 22, 2010 (Earlier : 18th October 2010)
Tax adjusted yield to investors
Investment Amount | Tax Slabs | ||||
20000 | Series 1 | Series 2 | Series 3* | Series 4* | |
30.90% | 13.89 | 12.06 | 17.19 | 15.74 | |
20.60% | 11.57 | 10.52 | 13.41 | 12.57 | |
10.30% | 9.64 | 9.18 | 10.23 | 9.86 | |
*Assuming investor exercises the Buyback option
Features of the Bond:
1. The bonds don't attract any TDS
2. 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
3. The bonds will be listed on NSE and BSE and can be traded after the 5 year lock-in period
4. Investors can mortgage or pledge these bonds to avail loans after the lock-in period.
5. An investor would need a demat account and pan card to invest in these bonds.(physical form is also allowed now)
6. The bonds will be issued only to Resident Indian individuals (major) and HUF
7. An applicant may subscribe to all the four options but the minimum application under each option shall be one bond i.e., Rs. 5,000
8. Interest on the bonds shall be payable on annual or cumulative basis depending on the series selected by the bond holders
You can also subscribe to the Bonds in physical form by following these simple steps:
* Don’t fill up the demat details in the application form
* Compulsorily provide the following three documents with the application form:
1. Self-attested copy of the PAN card;
2. Self-attested copy of a cancelled cheque of the bank account to which the amounts pertaining to payment of refunds, interest and redemption, as applicable, should be credited.
3. Self-attested copy of the proof of residence. Any of the following documents shall be considered as a verifiable proof of residence:
o Ration card issued by the Government of India; or
o Valid driving license issued by any transport authority of the Republic of India; or
o Electricity bill (not older than 3 months); or
o Landline telephone bill (not older than 3 months); or
o Valid passport issued by the Government of India; or
o Voter’s Identity Card issued by the Government of India; or
o Passbook or latest bank statement issued by a bank operating in India; or
o Leave and license agreement or agreement for sale or
o rent agreement or flat maintenance bill; or
o Letter from a recognized public authority or
o public servant verifying the identity and residence of the Applicant.
About IDFC:
IDFC is a leading knowledge-driven financial services company in India and plays a central role in advancing infrastructure development in the country. IDFC is a one-stop-shop for all products and services across the infrastructure value chain. Established in 1997 as a private sector enterprise by a consortium of public and private investors, the Company listed its Equity Shares in India pursuant to an initial public offering in August 2005.
Frequently Asked Questions on InfrastructureBonds (FAQs)
What is the Tax Treatment of interest on these Bonds?
* The interest received on these bonds shall be treated as income from any other source and shall form part of the total income of the assessee in that financial year in which they are received.
Who are the eligible investors?
* Only Resident Indian Individuals (Major) and HUF can invest in these bonds.
Can a Minor apply for subscription to these bonds?
* A minor is not eligible to apply for subscription to these bonds.
Are these infrastructure bonds Tax Free?
* No, the interest received in these bonds is not tax free. The investor is liable to pay tax on the interest received
Will TDS be deducted on these bonds?
* No TDS shall be deducted on the interest received as these bonds are issued Compulsorily in Demat mode and shall be listed on NSE & BSE.
I don't have Demat Account. Can I apply?
* The bonds shall be compulsorily issued in Demat mode, so investors without Demat A/c shall not be eligible.(physical form is also allowed now)
I only have a joint De-mat account. Can I apply in my own name only?
* The name of applicant shall be same as the holders of Demat account. In case of single applicant the demat account shall also be held in the name of the same single applicant.(physical form is also allowed now)
Can I apply in joint names?
* Yes application can be made in joint names with a maximum of three applicants, however the demat account shall also be held in the joint names and order of applicant shall be the same as appearing in the demat account. In case of application made in joint names, the tax benefit shall only be availed by the first applicant.
What is the maximum amount for which the benefit u/s 80CCF be availed?
* Maximum benefit to an investor shall be Rs. 20,000/-- under section 80CCF of the Income Tax Act, 1942
What would happen if I apply amount more than Rs. 20,000/-?
* The allotment shall be made for the sum applied, however the benefit under section 80CCF may only be availed for a maximum sum of Rs.20,000/-
Can I invest in all the four option?
* Yes an applicant may subscribe to all the four options but the minimum application under each option shall be one bond i.e. Rs.5000/-
What is the benefit of investing in Tax Saving Infrastructure Bonds if they offer the same tax benefit?
* The Tax exemption benefit under Sec 80CCF on a sum of Rs. 20,000/- is over and above Rs. 1,00,000/- benefit under section 80C, 80CCC and 80CCD
What is the tenure & lock-in period of these Tax Free Infrastructure Bonds?
* The Tenure of these bonds shall be 10 years and the bonds have a lock-in of 5 years
Who can offer these Long Term Infrastructure Bonds?
* The entities like LlC, IDFC, IFCI and other NBFCs which are classified as Infrastructure Finance Companies by RBI shall be allowed to issue these long term infrastructure bonds.
I Don't have a PAN card. Can I still apply for subscription?
* PAN card is mandatory for subscribing to these bonds.
How will i get my interest on the due date?
* The interest shall be credited to the respective Bank account registered with the Demat account through ECS on the due date for interest payment, and -if the due date is a public holiday then the next working date.
Can I get loan on these bonds?
* You cannot avail of any loan pledging these bonds in the first 5 years. Thereafter, these bonds may be pleadged to avail of loans
Where shall I submit the application forms?
* The application form may be submitted at the branches collecting banks whose addresses are mentioned on the application forms.
Who shall pay the interest and repay the Principal amount?
* IDFC Limited shall pay the interest on these bonds and also the principle amount to the investor upon maturity of the bonds or at the time of buy back. The bonds are credit rated as "LAAA" with stable outlook indicating safety of highest order
Who would get the interest in case of the joint application?
* In case of joint application the interest shall be paid to the account of the first applicant only.
In whose favour the cheque is to be made?
* Cheques has to be made in the favour of "IDFC Infra Bonds"
Can Intercity clearing cheques acceptable?
* No, cheques has to be payable at par or local clearing cheques are only allowed.
In whose favour the cheque is to be made?
* Cheques has to be made in the favour of "IDFC Infra Bonds"
Can Intercity clearing cheques acceptable?
* No, cheques has to be payable at par or local clearing cheques are only allowed.
Can I accept NRI application?
* No NRI's are not allowed to invest in this issue. Please check, NRIs on non-repatriate basis can apply ?
Shall I also submit the application forms with the collection Bank?
* Yes
Can I accept Minor applications?
* Minors are not allowed to invest in this Issue. So minor application even accompanied by Guardian is not acceptable.
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