What Are Infrastructure Bonds
Infrastructure Bonds are those bonds, the proceeds of which are invested by a non banking financial company like Industrial Finance Corporation of India in the infrastructural facilities of the country. To put it in simpler words, these companies take money from you and lend it to government. These bonds usually carry a fixed rate of interest to be paid at the time of maturity. They have become a tool for saving taxes as the amount which you invest in such bonds are exempted from taxes.
A secure investment with a noble cause
Since these bonds are used to fund government’s infrastructural projects, they are quite safe to invest in. You can rest assured that your money is secure with these bonds, unlike smaller financial banks. Moreover, if you are investing in such bonds, you can feel good of the fact that you are contributing to the development of your nation’s infrastructure and still getting a decent rate of interest on your money.
Bigger Advantage: Tax Benefits
Not all, but most of people investing in Infrastructural Bonds do so with an intention to save taxes on the invested amount. With a maturity period ranging from 10 to 15 years, these bonds offer tax benefit under the 80CCF 1981 to the tune of 20,000 Indian Rupee. However, what is noteworthy that you can save on taxes only during the first year of the purchase. From next year, even the interest which you get out of these bonds would be taxable.
Who can apply for these bonds?
The three basic requirements that you need in order to apply for an infrastructure bond are that you should have a Pan Card, an Address Proof and a Demat Account. Moreover, any Indian resident who have exhausted the Rs. 1 Lakh limit under Section 80C can invest in these bond.
Over all, it’s a good option for people who want to contribute to nation’s growth and save on taxes along with getting decent interest and sum assured for the money they invest.