Infrastructure Bonds
These are issued by infrastructure companies approved by the government and they offer a decent rate of interest plus tax benefits. Investment up to Rs 20,000 in these bonds is eligible for income tax deduction under Section 80 CCF of the Income-Tax Act.
What is Infrastructure Bonds?
A bond is an instrument to borrow money.Governments and companies need to borrow money for projects or expansion. Infrastructure bonds are borrowings to be invested in government funded infrastructure projects within a country. They are issued by governments or government authorised Infrastructure companies or Non- Banking Financial Companies.
How do Infrastructure Bonds Work?
Any Indian resident (not a minor) or a Hindu undivided family or can invest. Infrastructure bonds are good for people who need a fixed income. They offer a decent rate of interest and tax benefits. The maturity of these bonds is often between 10 to 15 years with an option to buy-back after a lock-in of 5 years. These bonds are listed either on or both National Stock Exchange or Bombay Stock Exchange that provides you with an option to exit after the lock-in period. A Lock-in period is when you cannot sell a particular instrument.
What are the Tax Benefits?
Why Should have Invest in Infra Bonds:
Easy Investments
Makes your investments easy to handle and monitor because of the Demat Form.
Liquidity
Listing on stock exchanges increases your liquidity.
Low Risk
Low risk involved, since issuing companies have high credit ratings.