Financial institution Industrial Finance Corporation of India (IFCI) today launched its first ever series of tax-free infrastructure bond for retail investors.
The subscriber of these bonds will enjoy tax exemption under Section 80CCF of the Income Tax Act, for investments up to Rs 20,000. This exemption is allowed over and above the existing investment exemption of Rs 1 lakh, IFCI said in a statement.
It may be recalled that in 2010-11 Budget, the Finance Minister had announced that the government would allow a deduction of an additional Rs 20,000 for investment in certain long-term infrastructure bonds. This was to promote savings and to ensure their utilisation for the thrust area of infrastructure.
IFCI is one of the few institutions, which have been mandated by the central government to issue such bonds. Besides, LIC, IDFC has been authorised to raise funds by issuing long-term bonds.
Apart from these institutions, bonds can be issued by a non-banking financial company, classified as an infrastructure finance company by the reserve Bank of India.
The subscription of these bonds with a tenure of 10 years closes on August 31. The interest rate is between 7.95 per cent and 7.85 per cent, depending on the tenure of the bond.