IDFC Infrastructure Bonds: Review, Analysis & Calculation for Effective Returns

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 beenfits available to the investors both in terms of returns as well as saving of taxes. In this article, we cover the review, analysis, tax saving calcuations and details of recently launched IDFC Long Term infrastructure Bonds, for tax savings and investment returns calculations

Review of IDFC Long term Infrastructure Bonds for Tax Saving

As the financial year in India is coming close, we are seeing a surge in promotional offers for tax saving schemes - both in advertisements as well as introduction of new tax saving scheme offers. The leading financial company, IDFC has come out with its tax saving scheme for Long Term Infrastructure Bonds called IDFC Long term Infrastructure Bonds. The issue is currently open and will close on 4th February.
Let's have a look at the basic details first and then we will check the effective calculations for investors, whether it makes sense to put your hard earned money in these Long term infrastructure Bonds from IDFC or not.

This scheme is for sale of infrastructure bonds, each bond will cost 5,000 Rs. One can buy as many bonds as he likes, but tax saving will only be given on a maximum investment of 20,000 Rs. i.e. only 4 bonds purchase will qualify for tax saving.
The scheme is lauched by IDFC under the section 80 CCF of Income Tax Act, which offers tax savings.

Any ratings given to IDFC Long term Infrastructure Bonds for Tax Saving?
Yes, ICRA has given LAAA and FITCH has given AAA (ind) which indicates a stable outlook for this investment scheme.

Is there a lock-in period for IDFC Long term Infrastructure Bonds for Tax Saving?
Yes - although the maturity period of these bonds is 10 years, the bonds can be traded on NSE and BSE after 5 years of holding period.
Repo or lending on these bonds will be allowed only after the lock in period of 5 years, as that is the minimum required lock in period for tax benefit purpose for Indfrastructure bonds.

What options are available for interest payment for IDFC Long term Infrastructure Bonds for Tax Saving?
One can opt for either annual interest payment or cumulative interest payment for these bonds.
Obviously, the effective returns will be higher in case of cumulative interest payment.

What are the subscription dates for IDFC Long term Infrastructure Bonds for Tax Saving?
The issue is currently open and will close for subscription of 4th February 2011.

How can one invest in IDFC Long term Infrastructure Bonds for Tax Saving?
Although paper based applications will be acceptable, here we provide the contact details and direct online link to IDFC site for reader who are interested in investing in IDFC Infrastructure Bonds for Tax Saving. IDFC site link.
You dont need to have a demat account for applying for IDFC Long term Infrastructure Bonds for Tax Saving. You can as well get them in physical paper based forms.

However, before going for investments, you must first check the calculations whether you are really getting any benefit from these bonds investments or not? Continue to Calculations of effective returns for IDFC Long term Infrastructure Bonds for Tax Saving