The Indian economy is on a robust growth trajectory and the best way to be a part of India’s growth story is to invest in its lifeline – its infrastructure. L&T Infrastructure Finance Company Ltd. has played an important role in financing projects, funded through long term investment instruments for Infrastructure development and construction across the country.
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 2011B Bond Series, investors can save tax and earn an annual interest rate of 9%. The 2011B series provides investors buyback options at the end of 5 years and 7 years. In addition to this, 2011B Bond Series provides investors the option of holding the bonds in Physical or Demat form.
About L&T Infra
L&T Infrastructure Finance Company Limited (L&T Infra) is promoted by the engineering and construction conglomerate Larsen & Toubro Limited (L&T) and L&T Finance Holdings Limited (a subsidiary of L&T).
L&T Infra, incorporated in 2006, is registered as an Non Banking Financial Company (NBFC) under the Reserve Bank of India (RBI) Act 1934, and is among the select few financial institutions classified as an Infrastructure Finance Company (IFC). It was set up with an initial capital of 500 crore (US$111 million) and has expanded at a rapid rate since inception.
L&T Infra provides a wide range of customized debt & equity products as well as Financial Advisory Services for the development of infrastructure facilities in the country with a focus on power, roads, telecom, oil & gas and port sectors. L&T Infra functions with high Corporate Governance standards and Independent Directors constituting 50% of its Board and the key committees. As a testimony to its strong credentials and sound operating performance, L&T infra enjoys AA+ credit ratings by both CARE and ICRA.L&T Infra operates from is Mumbai, Delhi, Chennai and Hyderabad centers – and is managed by a team of experienced banking professionals, under the guidance of an eminent Board drawn from both L&T and banking industry.
Here’s a defined structure of interest rates and tax deduction under these bonds.
The specific terms of the instrument:
|Frequency of Interest||Rs. 1000||Rs. 1000|
|Buyback Date||The first Working Day after the expiry of 5 years from the Deemed Date of Allotment and the first Working Day after the expiry of 7 years from the Demmed Date of Allotment|
|Buyback Amount||Rs. 1,000 at the end of 5 years /
Rs. 1,000 at the end of 7 years
|Rs. 1,538.62 at the end of 5 years /
Rs. 1,828.04 at the end of 7 years
|Buyback Intimation Period||The period commencing from 6 months preceding the relevant Buyback Date and ending 3 months prior to such Buyback Date.|
|Maturity Date||10 years from the Deemed Date
|10 years from the Deemed Date
|Interest Rate||9 % p.a.||9 % p.a. compounded annually|
|Maturity Amount||Rs. 1000||Rs. 2,367.36|
|Yield on Maturity*||9 % p.a.||9 % p.a. compounded annually|
|Yield on Buyback*||9 % p.a.||9 % p.a. compounded annually|
* The yield on the Tranche 1 Bonds (to be paid by the Issuer) shall not exceed the yield on government securities of corresponding residual maturity, as reported by FIMMDA, as on the last working day of the month immediately preceding the month of the issue of the Tranche 1 Bonds.
Issue Opening Date – November 25,2011
Issue Closing Date- December 24, 2011
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.
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.
The investment up to Rs. 20,000 made will be eligible for tax benefits in the year of investment under Section 80 CCF of the Income Tax Act, 1961.
Will TDS be deducted on these bonds?
No TDS shall be deducted on interest with respect to bonds issued in Demat mode. TDS will apply with respect to bonds issued to investors in physical form.
What is the maximum amount for which the benefit u/s 80CCF be availed?
Maximum benefit to investor shall be Rs. 20,000/– under section 80CCF of the Income Tax Act, 1961
What would happen if I apply amount more than Rs. 20,000?
The allotment shall be made as per the Basis of Allotment, However, the benefit under section 80CCF of the Income Tax Act, 1961, of the Income Tax Act may only be availed for a maximum sum of Rs. 20,000
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.
I Don’t have a PAN card. Can I still apply for subscription?
PAN card is mandatory for subscribing to these bonds.
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Source – http://www.ltinfrabond.com