IDFC Infrastructure Bonds

POSTED BY naveed ON January 19, 2011 2:25 pm COMMENTS (6)

 

IDFC is launched once again Infrastructure Bonds. May know waht is the difference between Series1/2 in layman prespective.

Issue Structure: The Tranche 2 Bonds, with a maturity of ten years, will be issued in two series.

  • Series-1: Carry a 8% coupon, payable annually
  • Series-2: Cumulative option, 8% coupon, compounded annually

6 replies on this article “IDFC Infrastructure Bonds”

  1. Sohil says:

    yes this is above 1 lakh 80c limit.

    20k can be saved further.

    Btw if you people fall under 10% tax bracket better practice would be to pay tax and invest the remaining amount in good mf as lot of things you need to take care about this bond once it matures after 5 years plus the lock in.

  2. reamer says:

    whether i will get an extra tax benefit of 20k if i invest 20k apart from usual tax upto 1 lakh (obtained through other schemes)? please help….

  3. naveed says:

    Manish,
    Many Thanks for detailed info. I will go for series1.

    Do you think is any other infrastructure bonds will come in future before Mar’11 other than IDFC.

  4. Bijay Agarwal says:

    Hey Manish, what about the the nature of these bonds , are these EEE ?

    1. Nope

      EET . the interest at the end would be taxable

  5. Series 1 is “payable annually” , so what ever interest is there will be payable to you each year in your bank account ,. you get it in your hand , so if you invest 1 lac and you get 8% interst which is 8000 in your hand , so your total capital is again 1 lac after 1 yr , because the interest if given to you .

    Next year again , you get 8,000 interest back to you …

    Series 2 : Here , the interest is “Cumulative” , its not paid to you , its added back to your capital , so 1 lac in first year , and then 1.08 lacs in next year , now next year you get 8% not only on 1 lac but 1.08 lacs , and so on ..

    So in series 2 there is “compounding” . At the end of 5 yrs ,you will get a bigger amount in series 2 , but series 1 is good from a liquidity stand point .So choice is yours ,what suits you !

    Manish

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