L&T Infra Bonds for Tax Saving: Review, Analysis & Calculation for Effective Returns

This article covers the details about L&T Infra Bonds for Tax Saving (Long Term Infrastructure Bonds from Larsen & Toubro Ltd. Calculations for Tax saving in L&T Infra Bonds as per the different income tax brackets is also covered..
High on the heels of IDFC who recently opened the subscription for their IDFC Infrastructure Bonds for Tax Saving, L&T has come out with their issue of Infrastructure Bonds for tax savings as the financial year is going to come to a close in India in March 2012. Same L&T had issued similar infrastructure bonds for tax savings in last financial year and here are the details of the same: L&T Infrastructure Bonds for Tax Saving - Feb 2011
The market should expect to see more buzz for Long Term Infrastructure Bonds from various companies in coming few months as tax savings will be on the minds of investors. So what's the difference between the bonds already available from other organizations and the one now offered by L&T? Bascially nothing except the interest rates offered and the organization which is offering them.
Let's start with some basics first:
If you are completely new to Tax Free Infrastructure Bonds, we strongly advise you to get the basic details about working of the infra bonds and the tax saving eligibility and calculations as mentioned in the article Tax Free Infrastructure Bonds Details: Save Tax On Investments in Infra Bonds. Once you are familiar with the basic calculations and tax saving details as per your individual tax slab, you can proceed with the details of this open issue of L&T Infra Bonds for Tax Savings 2011-2012 (Similar offering L&T had last year and the details of that can be seen on L&T Infrastructure Bonds for Tax Saving - Feb 2011. Last year L&T Infra bonds managed to raise around 450 Crore Rs. through the infra bond issue.

Review of IDFC Long term Infrastructure Bonds for Tax Saving

The basic working of these bonds from any issuing company or organization remains the same, whether it is IDFC or L&T or IDFC or IFCI. Here are the examples of the calculations including tax benefits for investments in Infrastructure bonds :Calculations and Returns in Infrastructure 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 aim is to collect around 1100 Crore Rs. from the market through the same of these infra bonds.

The bonds are being offered in 2 different series - basically meaning that investors have 2 choices/options for investments:

Series 1 - is for 10 year long bonds paying an interest rate of 9% per annum (annual interest payment) - Maturity Amount is 1000 Rs. as interest is payable annually.

Series 2 - Is for 10 year long bonds paying an interest rate of 9% per annum (cumulative interest payment) - Maturity Amount is 2367.36 Rs.

The bonds will be listed on BSE only (Not NSE) and can be traded after the minimum lock in period of 5 years - the lock in period if for gaining the tax benefit. These bonds will come with a buyback option after 5 years i.e. IDFC holds the right to buy back the bonds after 5 year period.

The face value of each bond is set to Rs. 1000 but a minimum of 5 bonds need to be bought - i.e. you need to invest minimum 5000 Rs. to buy a L&T infra bond. Upper limit is not there i.e. one can apply for and buy any no. of bonds from L&T.
Annual interest payment bonds will be bought back at the rate of Rs. 5000 while cumulative interest payment bonds will be bought back at the rate of Rs. 7695 per bond.

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 Infra Bonds.

What differentiates L&T Infra Bonds from the other issues like L&T Infra Bonds which are currently open?
As of now only IDFC Infra bonds issue is open (See details: IDFC Infrastructure Bonds for Tax Saving), but very soon we expect more infrastructure companies to line up with their issues as there are still 4 months to end of financial year.
The main difference between L&T infra bonds and IDFC infra bonds is the credit rating assigned and the price per bond.

What is the security rating for the L&T Infra Bonds ?
Fitch has given a AA+ rating, ICRA has given AA+ rating to the L&T Infra Bonds.
These are the highest credit ratings awarded by these rating agencies

How much will I effectively save by investing in L&T Infra Bonds ?
The calculations will be similar to what we covered for L&T Infra Bonds. Please see L&T Infra Bonds for Tax Saving: Calculations, Review and Details

What are the investment dates and period for L&T Infra Bonds ?
The L&T Infra Bonds subscription date was opened on 25 November 2011 and will close on 24 December 2011. This will give you enough time to plan your investments rather than waiting for last minute tax savings. Also, 9% interest offering looks good.
It is not mandatory to have a PAN no. for buying these bonds. Also, one can buy these bonds in both demat as well as physical format

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

This article covers the details about IDFC Infrastructure Bonds for Tax Saving (Long Term Infrastructure Bonds from Infrastructure Development Finance Company Limited (IDFC Ltd). Calculations for Tax saving in IDFC Infrastructure Bonds as per the different income tax brackets is also covered..
Last year, around this time, there was a wave of lot of infrastructure bonds coming to the market for tax saving purpose. We'd covered them extensively in deep details. Now that the financial year is coming to a close in India in next few months, the same companies are again lining up with a new fresh issue of similar long term infrastructure bonds.
The market should expect to see a buzz for Long Term Infrastructure Bonds from various companies in coming few months. There were Infrastructure Bonds from IDFC, IIFCL and L&T already available in the market during this time last year. Today, IDFC has come out with a new fresh issue of similar bonds and it is currently open for subscription, under the name IDFC Long Term Infrastructure Bonds for Tax Saving. So what's the difference between the bonds already available from other organizations and the one now offered by IDFC? Bascially nothing except the interest rates offered and the organization which is offering them.
Let's start with some basics first:
If you are completely new to Tax Free Infrastructure Bonds, we strongly advise you to get the basic details about working of the infra bonds and the tax saving eligibility and calculations as mentioned in the article Tax Free Infrastructure Bonds Details: Save Tax On Investments in Infra Bonds. Once you are familiar with the basic calculations and tax saving details as per your individual tax slab, you can proceed with the details of this open issue of IDFC Infrastructure Bonds for Tax Savings 2011-2012 (To check what offering IDFC had last year, one can read more about the details IDFC infrastructure Bonds that was available in last financial year)

Review of IDFC Long term Infrastructure Bonds for Tax Saving

The basic working of these bonds from any issuer, whether it is IDFC or L&T or IDFC or IFCI, remains the same. 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 IDFC Infra Bonds for Tax savings in more detail:

The bonds are being offered in 2 different series - basically meaning that investors have 2 choices/options for investments:

Series 1 - is for 10 year long bonds paying an interest rate of 9% per annum (annual interest payment)

Series 2 - Is for 10 year long bonds paying an interest rate of 9% per annum (cumulative interest payment)

The bonds will be listed on NSE and BSE and can be traded after the minimum lock in period of 5 years - the lock in period if for gaining the tax benefit. These bonds will come with a buyback option after 5 years i.e. IDFC holds the right to buy back the bonds after 5 year period.

The face value of each bond is set to Rs. 5000 - i.e. you need to invest minimum 5000 Rs. to buy a bond - cost of 1 bond. Upper limit is not there i.e. one can apply for and buy any no. of bonds from IDFC.
Annual interest payment bonds will be bought back at the rate of Rs. 5000 while cumulative interest payment bonds will be bought back at the rate of Rs. 7695 per bond.

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 IDFC Infrastructure Bonds.

Depending upon your income tax slab, following tab benefits are available, in case of Maturity and in case of Buyback:

Tax Benefit adjusted rate of returns (pre-tax) to Investors on Maturity
Tax Slab – 30.90% 15.2% 13.1%
Tax Slab – 20.60% 12.8% 11.5%
Tax Slab – 10.30% 10.7% 10.2%

Tax Benefit adjusted rate of returns (pre-tax) to Investors on Buyback
Tax Slab – 30.90% 19.1% 17.4%
Tax Slab – 20.60% 15.2% 14.2%
Tax Slab – 10.30% 11.8% 11.4%

What differentiates IDFC Infrastructure Bonds from the other issues like IDFC Infrastructure Bonds which are currently open?
The difference is in the interest rate or coupon rate offered on IDFC bonds.

What is the security rating for the IDFC Infrastructure Bonds ?
Fitch has given a AAA Stable rating, ICRA has given AAA (Stable Outlook) rating to the IDFC Infrastructure Bonds.
These are the highest credit ratings awarded by these rating agencies

How much will I effectively save by investing in IDFC 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 IDFC Infrastructure Bonds ?
The IDFC Infrastructure Bonds subscription date was opened on 21 November 2011 and will close on 16 December 2011. This will give you enough time to plan your investments rather than waiting for last minute tax savings. Also, 9% interest offering looks good

Religare Gold Fund NFO: Review Analysis & Details

Details about Religare Gold Fund: Review, Analysis, Details & Investment Opinion.
There comes another so-called "Gold Fund" from a new mutual fund house. Everyone is hopping on Gold for their investments so the mutual fund houses are going on launching Gold funds one after the other in the already over-flooded market. Just search for Gold Fund using the search box on this site and you can see how flooded the market currently is.
In this article, we will analyze how good is this Religare Gold Fund NFO, whether this Religare Gold Fund offers anything new or unique for the investors and whether the investors should invest in Religare Gold Fund.

Religare Gold Fund NFO: Review Analysis & Details

Let's begin with some basic details about Religare Gold Fund.

What are the NFO dates for Religare Gold Fund?

The NFO period for Religare Gold Fund is from 15 November and will close on 29 November 2011. After the NFO period, the regular buying and redemption of fund units will start. This will be a passively managed fund of funds (What's this?) or better to say fund of a single fund.

What is so unique about this Religare Gold Fund?
Nothing - absolutely nothing is unique in this Godl fund. Like any other Gold fund or Gold saving fund already available in the market, the Religare fund managers will collect money from the investors, and invest that into their own Gold based ETF called Religare Gold ETF or Religare Gold Exchange Traded Fund.
The benefit these kind of investments claim to offer is no requirement for a demat account, exposure to gold in small amounts of investments, easy SIP facility and so on. However, if you are reading this article on a computer, that means you are computer savvy and with a good probability you will have a demat account. Anyways, see the next section on why this Religare Gold Fund is not unique.

What are the other competitor products available in comparison to Religare Gold Fund?
The list is endless. Hardly anything looks different. The recently lauched Axis Gold Fund, then the ICICI Gold Savings Fund, SBI Gold Fund and Reliance Gold Savings Fund (See Review & Details) are the biggest and direct competitor to Religare Gold Fund.
Other than that, there are a lot of Gold based ETF's and Gold based Mutual Funds available:
List of Gold ETF India available for trading on NSE

HDFC has its own ETF: HDFC Gold ETF NFO: Review Analysis & Details apart from others like Quantum Gold Fund (Gold ETF) ICICI Prudential Gold ETF, then SBI GETS-SBI Gold ETF NFO Review: SBI Gold Exchange Traded Scheme and so on.

Other Gold Schemes: Quantum Gold Fund

What are the risks of investing and trading Religare Gold Fund?
The benchmark for Religare Gold Fund is the physical price of gold. Since this is a fund of fund, it will be the Religare Gold ETF which is expected to track the gold prices and then those End of the prices will be reflected in the returns of this Religare Godl Fund. Being an End of the Day pricing product, the fund manager will attempt to give similar returns like the tracking gold price but the tracking error will surely creep in.

Final Thoughts about Religare Gold Fund?
Another Fund of Funds in the Gold investment arena, nothing new compared to what other Gold funds or Gold Saving Funds (already available in the market ) are offering. This fund just adds to the list and gives investors more choice of investment in Gold through a new fund house.
See List of All Mutual Fund and NFO Articles here

During NFO period each unit cost Rs. 10 per unit
Minimum investment Rs 5000 and in multiples of Re 1 afterwards.

Tax benefit will NOT be available in Religare Gold Fund.

Multiple options available for investments:
Growth Option
Dividend Option - Payout, Reinvestment facilities

Religare Gold Fund Entry Load:
Religare Gold Fund Exit Load: 1% if exit within 1 year ; 2% is exit within 6 months (this is high compared to other gold funds)
NIL beyond 1 year.

SIP or systematic investment plan? Yes. Minimum SIP tenure is 6 months, with minimum SIP amount of Rs. 1000 and in multiples of Re. 1 thereafter.
Physical Gold Prices in India will be the benchmark for tracking the performance of Religare Gold Fund

Mr. Nitish Sikand will be the fund manager for Religare Gold Fund

Union KBC Tax Saver ELSS Fund NFO: Review Analysis & Details

Details about Union KBC Tax Saver ELSS Fund: Review, Analysis, Details & Investment Opinion.
After a long time, we are seeing an ELSS or Equity Linked Savings Scheme NFO coming out. Recent;y, the joint venture between Union Bank of India and KBC asset management came out with their first offering called Union KBC Equity Fund and now this ELSS Tax saver fund will add another product to their portfolio.

The Union KBC Mutual Fund House is launching their Union KBC Tax Saver ELSS Fund. In this article, we will analyze how good is this Union KBC Tax Saver ELSS Fund NFO, whether this Union KBC Tax Saver ELSS Fund offers anything new or unique for the investors and whether the investors should invest in Union KBC Tax Saver ELSS Fund.

Union KBC Tax Saver ELSS Fund NFO: Review Analysis & Details

Let's begin with some basic details about Union KBC Tax Saver ELSS Fund.
What actually is an ELSS or Equity Linked Savings Scheme Fund?
An ELSS is a special mutual fund which invests the money collected from the investors in the equities listed in the stock market like any other mutual fund. However, ELSS comes with the advantage of tax benefit - i.e. the invested amount qualifies for tax deduction under section 80(C) (Section 80C Tax Savings: Complete List of Qualifying Investments) with a sum total limit of 1 Lakh Rs.
Since it is offering tax benefit, it comes with a condition - there is a lock-in period of minimum 3 years for an investor to get tax benefit on the invested amount. For e.g., if I invest Rs. 50,000 in an ELSS and claim tax benefit on that, then I am not supposed to withdraw this money atleast for next 3 years. I can withdraw that money by redeeming the fund units before 3 years, but I will loose out on the claimed tax benefit.
You can find more info on ELSS scheme in the article: Tax saving By Equity Linked Saving Schemes ELSS

What are the NFO dates for Union KBC Tax Saver ELSS Fund? The NFO period for Union KBC Tax Saver ELSS Fund is from 8 November and will close on 9 December 2011. After the NFO period, the regular buying and redemption of fund units will start, on date 19 Dec 2011.

What is so unique about this Union KBC Tax Saver ELSS Fund?
Nothing special, it's just another ELSS Mutual Fund offering investments in equity market with the advantage of tax benefit on the condition that you stay invested atleast for 3 years. There are lot many other competitor ELSS products already available in the market - like SBI Tax Advantage fund.

What are the other competitor products available in comparison to Union KBC Tax Saver ELSS Fund?
Lots and lots are availble, here are a few: Principal Personal Tax Saver Fund (ELSS), then SBI Tax Advantage fund, Reliance Equity Linked Savings Fund and many more

What are the risks of investing and trading Union KBC Tax Saver ELSS Fund?
The benchmark for Union KBC Tax Saver ELSS Fund is the BSE 100 Index. The fund manager will attempt to give similar returns like the tracking index but the tracking error will surely creep in.
By investing in any mutual fund, you are risking your money as per the will and wish and investment decisions of the fund house and fund manager.

Final Thoughts about Union KBC Tax Saver ELSS Fund?
Another ELSS scheme from a relatively new mutual fund house which has just started fund management business. Offering a tax saving ELSS might allow them some more money collection as compared to a normal mutual fund. The timing appears to be a bit early as tax year in India comes to a close in April. My thought is that possibly lauch in January would have given them more capital collection, as that is the time people really start looking for tax saving investments.
See List of All Mutual Fund and NFO Articles here

During NFO period each unit cost Rs. 10 per unit
Minimum investment Rs 500 and in multiples of Rs 500 afterwards.

Tax benefit will be available in Union KBC Tax Saver ELSS Fund, subject to lock in period of 3 years from the date of allotment.

Multiple options available for investments:
Growth Option
Dividend Option - Payout, Reinvestment facilities

Union KBC Tax Saver ELSS Fund Entry Load: No info available
Union KBC Tax Saver ELSS Fund Exit Load: No info available 1% if exit within 1 year ; 2% is exit within 6 months (this is high compared to other gold funds)
NIL beyond 1 year.

SIP or systematic investment plan? No info available.
BSE 100 Index will be the benchmark for tracking the performance of Union KBC Tax Saver ELSS Fund