High on the heels of IIFCL Infrastructure Bonds and IDFC infrastructure Bonds, the L&T or Larsen and Toubro group has also come out with its set of infrastrucutre bonds to collect money from investors and provide them with the juicy option in the name of tax savings. One can read more about the details we covered for IIFCL Infrastructure Bonds and IDFC infrastructure Bonds, as they too are good option available for investments.
Review of L&T Long term Infrastructure Bonds for Tax Saving
One this all the investors should note is that the basic workinfg of all these various infrastructure bonds offered by these various organizations like L&T, IIFCL, IDFC, etc. remain the same. General details and working of the infrastructure bonds is covered in the article: 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.
The basic working of these bonds from any issuer, whether it is L&T 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. What differes is the rate of returns, the period of investments, the coupon rate and hence the effective interest payment and tax free calculations. Here are the examples of the calculations including tax benefits for investments in Infrastructure bonds :Calculations and Returns in Infrastructe Bonds Investments.
Now, once you are clear about the fundamental details, let's see the L&T Infra Bonds for Tax savings in more detail:
The issue size of L&T Infrastructure Bonds is 100 Crore Rs.
The bonds are being offered in 2 different sereis - basically meaning that investors have 2 choices/options for investments:
Series 1 - Is for 10 year long bonds with a buyback option at 5 years and pays an ANNUAL interest rate of 8.2%
Series 2 - Is for 10 year long bonds with a buyback option at 5 years and 7 years and pays an CUMULATIVE interest rate of 8.3%
The bonds will be listed on NSE and can be traded after the minimum lock in period of 5 years (as they offer tax benefit)
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 L&T 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 L&T 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 L&T Infrastructure Bonds ?
CARE has given AA+ rating and ICRA has given LAA+ rating to the L&T Infrastructure Bonds.
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 L&T 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
What are the investment dates and period for L&T Infrastructure Bonds ?
The L&T Infrastructure Bonds subscription date was opened on 7th February and will close on 7th March.
All Tax Saving Infrastructure Issues open Now:
IDFC Infrastructure Bonds for Tax Saving
IIFCL Infrastructure Bonds for Tax Saving - Closing 4th March 2011
PFC Infrastructure Bonds: Review - Closing on 22nd March 2011
More information can be obtained by calling the L&T Infra Bonds TOLL FREE NUMBER:1800 102 2131
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