Infrastructure Bond – Save Tax or Make investment or Both?

Infrastructure bond are being issued by many companies, like ICICI, IDBI, LIC and many more. Infrastructure bonds are bonds that provide funds for the development of the real estate in the country. They are specialised bonds and can be issued for this purpose only that is the funds raised from the issue of infrastructure bonds can’t be utilised for any other purpose. There are certain point that a person should always remember before investing in any infrastructure bond that is the interest that is being provided on the bonds are fixed and so it does not provide any protection in the case of inflation. Second point to be remembered is that the person having infrastructure bond can place it in the bank for loan on the bond but the loan that is being given is based on the current market value of the bond and the credit worthiness of the bond and last but not the least infrastructure bonds are considered to be a safe investment but still there is no guarantee that the amount invested in the bond will be fully realised back at the time of the maturity or after the lock in period is over.

Infrastructure bond can be a good choice for investment as it provide with high return on the amount invested. There is no limit as to the amount that can be invested in the bond but as far as the tax saving is concerned there is a limit. A person falling in the highest slab of the income tax that is thirty percent can claim a tax saving of six thousand and not anything above that. That is a person investing somewhere round twenty thousand and is there in the highest slab of the income tax are eligible for deduction of twenty thousand and can save tax up to rupees six thousand. There is another benefit as to the deduction that a person claiming deduction is over and above the prescribed limit of one lack that is available to a person in chapter VIA of the income tax act and under the section 80C. an individual can claim deduction of one lack by investing in LIC, PPF, NSC and many more to claim the deduction and the benefit of the investment in infrastructure bond is available over and above the prescribed limit of one lack. Here the extra advantage of the twenty thousand is available only for infrastructure bond and not cannot be utilised by investment in any other kind of investments.