80CCF Infrastructure Bonds List in 2023 – Pros & Cons

80CCF Infrastructure Bonds List

This article will examine the list of 80CCF Infrastructure Bonds. Firstly, we will define what the 80CCF deduction is, its advantages and disadvantages, and how Infrastructure bonds work.

What is 80CCF Deduction in Income Tax?

80CCF is a section of the Indian Income Tax Act that provides deductions to individuals who invest in specific infrastructure bonds. Here are some key points related to 80CCF deduction:

1. The deduction is available only to individual taxpayers and Hindu Undivided Families (HUFs).
2. The maximum deduction allowed under this section is Rs. 20,000. This deduction is in addition to deductions allowed under sections 80C, 80CCC, and 80CCD.
3. The deduction is available only for investments made in notified long-term infrastructure bonds issued by designated financial institutions.
4. The investment made in these bonds has a lock-in period of 5 years, and premature withdrawals are not allowed.
5. The interest earned on these bonds is taxable as per the individual’s tax slab.
6. The deduction is available for investments made in the financial year in which the bonds are issued.
7. The bonds can be purchased from designated institutions like LIC, IDBI, ICICI, HDFC, and others.
8. The investment made in these bonds qualifies for deduction only up to Rs. 20,000, regardless of the actual investment amount.
9. The deduction is not available to non-resident Indians (NRIs) and foreign nationals.
10. The objective of this section is to encourage investment in infrastructure projects and provide a boost to the country’s infrastructure sector.

How do Infrastructure bonds work?

Infrastructure bonds are long-term debt securities issued by designated institutions in India to finance infrastructure projects in the country. These bonds work in the following way:

1. Issuance:
   The designated institutions issue infrastructure bonds to raise funds for infrastructure development. These bonds have a fixed maturity period, typically ranging from 10 to 15 years.
2. Subscription:
   Investors can subscribe to these bonds by investing money in them. The minimum investment amount may vary depending on the issuing institution and the bond series.
3. Interest payments:
   Infrastructure bonds offer a fixed rate of interest, which is paid out to investors on an annual or semi-annual basis. The interest rate may vary depending on the bond series and the issuing institution.
4. Lock-in period:
   Infrastructure bonds have a lock-in period of five years from the date of allotment. Premature withdrawals are not allowed during this period.
5. Tax benefits:
   Investments in infrastructure bonds are eligible for tax benefits under Section 80CCF of the Income Tax Act, up to a maximum limit of Rs. 20,000 per financial year.
6. Credit rating:
   Infrastructure bonds are rated by credit rating agencies based on their creditworthiness. Investors should check the credit rating of the bond before investing to assess the risk associated with it.
7. Redemption:
   At the end of the maturity period, investors receive the principal amount invested along with the final interest payment. Investors may also choose to sell their bonds on the stock exchange before maturity.

In summary, infrastructure bonds provide an opportunity for investors to invest in long-term debt securities that offer fixed interest rates and tax benefits. These bonds help in financing infrastructure development in the country and provide a stable investment option for investors.

List of 80CCF Infrastructure Bonds

Here is a list of infrastructure bonds issued by designated institutions in India under Section 80CCF of the Income Tax Act along with some details:

1. IDFC Infrastructure Bonds Series 1 and Series 2:
   • Issued by IDFC First Bank Limited
   • Interest rate of 7.5% p.a. payable annually
   • Lock-in period of 5 years from the date of allotment
   • Minimum investment of Rs. 5,000 and in multiples of Rs. 1,000 thereafter up to a maximum of Rs. 20,000
2. L&T Infrastructure Finance Company Ltd. Tranche 1 and Tranche 2 Bonds:
   • Issued by L&T Finance Limited
   • Interest rate of 7.65% p.a. payable annually
   • Lock-in period of 5 years from the date of allotment
   • Minimum investment of Rs. 5,000 and in multiples of Rs. 1,000 thereafter up to a maximum of Rs. 20,000
3. IFCI Long Term Infrastructure Bonds Series 1 and Series 2:
   • Issued by IFCI Limited
   • Interest rate of 7.75% p.a. payable annually
   • Lock-in period of 5 years from the date of allotment
   • Minimum investment of Rs. 5,000 and in multiples of Rs. 1,000 thereafter up to a maximum of Rs. 20,000
4. REC Long Term Infrastructure Bonds Series 1 and Series 2:
   • Issued by Rural Electrification Corporation Limited
   • Interest rate of 7.53% p.a. payable annually
   • Lock-in period of 5 years from the date of allotment
   • Minimum investment of Rs. 5,000 and in multiples of Rs. 1,000 thereafter up to a maximum of Rs. 20,000
5. PFC Long Term Infrastructure Bonds Series 1 and Series 2:
   • Issued by Power Finance Corporation Limited
   • Interest rate of 7.43% p.a. payable annually
   • Lock-in period of 5 years from the date of allotment
   • Minimum investment of Rs. 5,000 and in multiples of Rs. 1,000 thereafter up to a maximum of Rs. 20,000
6. India Infrastructure Finance Company Limited (IIFCL) Tranche 1 and Tranche 2 Bonds:
   • Issued by India Infrastructure Finance Company Limited
   • Interest rate of 7.50% p.a. payable annually
   • Lock-in period of 5 years from the date of allotment
   • Minimum investment of Rs. 5,000 and in multiples of Rs. 1,000 thereafter up to a maximum of Rs. 20,000

It is important to note that the interest rates, lock-in periods, and minimum investment amounts may vary depending on the bond series and the institution issuing the bonds. Investors should always read the prospectus and terms and conditions of the bonds before investing.

What is the Advantage and Disadvantage of Infrastructure Bonds in India

Here’s a table summarizing the advantages and disadvantages of infrastructure bonds in India:

It’s important to note that this is not an exhaustive list and there may be additional factors to consider before investing in infrastructure bonds.

In summary, while infrastructure bonds offer tax benefits and a stable income stream for investors, they also have disadvantages such as a lock-in period, low liquidity, and interest rate risk. Investors should carefully consider these factors before investing in infrastructure bonds.

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