L&T Infra Bonds

October 18, 2010

After, IFCI & IDFC, it is now the turn of L&T Infrastructure Finance Company Limited (L&T Infra) to come out with tax saving infrastructure bonds for the retail investor that also allows deduction u/s 80CCF of the Income Tax Act 1961 to Individuals & HUFs who invest in these bonds.

The maximum amount of deduction available is Rs. 20,000 per income tax assesses and it is over & above Rs. 1 lac deduction allowed u/s 80C.

So it makes sense for any investor in the 30% tax bracket to invest in these bonds and get instant tax savings of Rs. 6,000+ by investing in these bonds.

The bonds will have a maturity of 10 years. As an exit option to the investors, the company will offer buyback facility at the end of 5th and 7th years from the date of allotment. The bonds are proposed to be listed on NSE and can be traded after the initial 5-year lock-in period. There would be four series of the bond. Each bond will have a face value of Rs 1,000 and would be issued at par. The issue opens on October 15 and closes on November 2.

YM Deosthalee, director, L&T Infra said: “There are similarities between our bond and the one which was recently issued by IDFC in terms of coupon rates for five-year paper. We are both offering a coupon rate of 7.5% for that period. However, unlike IDFC, we are offering coupon rates for seven years and beyond.”

Also, unlike IDFC, whose bond can be purchased only by opening a demat account, L&T Infra has got approval from the competent authority to make investors able to purchase its bond even without having demat account. It is basically for those retail investors that live in far-flung areas of the country and hence are unable to open demat account, he said.

Documents required:

PAN card is compulsory but demat is not compulsory.

Who can Invest?

Individuals & HUF can invest in these bonds.

Offer period

Oct 15, 2010 to Nov 2, 2010.

AUM View

SUBSCRIBE to these bonds if you are in the 30% tax bracket and if you missed the IDFC bonds.