IIFCL Infrastructure Bonds for Tax Saving: Review, Analysis & Calculation for Effective Returns: Finance Trading Times

IIFCL Infrastructure Bonds for Tax Saving: Review, Analysis & Calculation for Effective Returns

This article covers the details about IIFCL Infrastructure Bonds for Tax Saving. Calculations for Tax saving as per the different income tax brackets is also covered..
It was recently we covered the general details of the recently introduced Tax Free Infrastructure Bonds Details: Save Tax On Investments in Infra Bonds - that article covered the basic details of working of Long Term Tax Free Infrastructure Bonds and the benefits available to the investors both in terms of returns as well as saving of taxes.

Review of IIFCL Long term Infrastructure Bonds for Tax Saving

The government owned IIFCL or Indian Infrastructure Finance Company, has opened up its Tax Saving Infrastucture Bonds Issue Scheme with an aim to collect around 1,200 Crore Rs. from the market with a long term investments points of view and offering tax savings. This scheme is very similar to the one currently open from IDFC: See IDFC Infrastructure Bonds for Tax Saving: Calculations, Review and Details. However, the difference lies in the interest rate offered by IIFCL bonds. IIFCL Infrastructure Bonds

The basic working of these bonds from any issuer, whether it is IIFCL or IDFC or L&T or IFCI, remains the same. To learn about the underlying concept, and how tax savings will work, please read the article Tax Free Infrastructure Bonds Details: Save Tax On Investments in Infra Bonds.
Now, once you are clear about the fundamental details, let's see the IIFCL Infra Bonds for Tax savings in more detail:

The issue size of IIFCL Infrastructure Bonds is 1,200 Crore Rs.

Minimum investment required is Rs. 5000 and maximum is open to the choice of investors.
However, as per the rule of tax-saving investments under section 80CCF of the IT Act, tax savings will be allowed only on a maximum of 20,000 Rs. irrespective of the amount of investments made in the IIFCL Infrastructure Bonds.

Including tax surcharge saving, the maximum tax saved by an investor who falls in 30% tax bracket will be Rs. 6158 (on the 20K investment).

What differentiates IIFCL Infrastructure Bonds from the other issues like IDFC Infrastructure Bonds which are currently open?
The difference is in the interest offered on these bonds.

What is the security rating for the IIFCL Infrastructure Bonds ?
Although no rating info is available, but the bonds are considered to be safe. The IIFCL company is government owned and hence the investments in IIFCL bonds is backed by the government, so investors can safely park their money in these bonds.

What are the investment options available for IIFCL Infrastructure Bonds ?
The IIFCL bonds are being launched in multiple series:
First and second series will be for 10 years long bonds and promises a return of 8.15% interest rate per annum
Third and fourth series will be for 15 year long bonds and gives a 8.3% return.

However, for all the investment series, there will be a lock-in period, as the bonds will give tax benefit.

How much will I effectively save by investing in IIFCL Infrastructure Bonds ?
The calculations will be similar to what we covered for IDFC Infrastructure Bonds. Please see IDFC Infrastructure Bonds for Tax Saving: Calculations, Review and Details

Other Issue Open Now: L&T Infrastructure Bonds for Tax Saving - Closing 7th March 2011

PFC Infrastructure Bonds: Review - Closing on 22nd March 2011

What are the investment dates and period for IIFCL Infrastructure Bonds ?
The IIFCL Infrastructure Bonds subscription date is currently open and will close on 4th March
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