LIC Infrastructure Bonds

If you are looking for a way to save on taxes while making a secure investment, LIC Infrastructure Bonds could be an excellent option for you. These bonds not only provide a tax exemption but also contribute to the development of infrastructure in India.

What Are LIC Infrastructure Bonds?

LIC Infrastructure Bonds are long-term investment options that allow individuals and Hindu Undivided Families (HUFs) to invest in infrastructure projects while enjoying tax benefits. Specifically, these bonds offer an additional tax exemption of up to Rs.20,000 under Section 80CCF of the Income Tax Act, over and above the ?1 lakh limit available under Section 80C.

Key Features of LIC Infrastructure Bonds

Tax Benefits Explained

Investing in LIC Infrastructure Bonds can lead to significant tax savings. For example:

• If you fall in the highest tax bracket (30%), you can save an additional Rs.6,000 by investing in these bonds.
• If you are in a lower tax bracket (10%), your savings could still amount to Rs.2,000.

This means that not only do you get a fixed return on your investment, but you also reduce your taxable income.

How Do LIC Infrastructure Bonds Work?

The bonds have a maturity period of 10 years with a lock-in period of 5 years. This means that your investment will remain locked for the first five years, after which you can choose to either:

• Request a buyback from LIC.
• Trade the bonds through your Demat account if you prefer liquidity.

You can hold these bonds in physical form as well, but having a Demat account simplifies the process of buying and selling.

Why Invest in LIC Infrastructure Bonds?

1. Capital Safety: LIC is one of the most trusted names in India’s financial sector, ensuring that your investment is safe.
2. Fixed Returns: The interest rate of 7.85% – 7.95% is attractive compared to traditional savings accounts or fixed deposits.
3. Support Infrastructure Development: Your investment contributes directly to India’s infrastructure projects, helping improve facilities and services across the country.

Other Options for Infrastructure Bonds

Apart from LIC, several other companies also offer infrastructure bonds:

• Industrial Finance Corporation of India (IFCI)
• Infrastructure Development Finance Company (IDFC)
• Various Non-Banking Financial Companies (NBFCs) are classified as infrastructure finance companies by the Reserve Bank of India (RBI).

Investing in these bonds not only helps grow your wealth but also plays a part in building the nation’s infrastructure.

Example of Tax Benefits

Let’s consider an example for clarity:

Suppose you invest Rs.20,000 in LIC Infrastructure Bonds:

• As a taxpayer in the 30% bracket:
  • Tax savings = Rs.20,000 * 30% = Rs.6,000
• If you are in the 10% bracket:
  • Tax savings = Rs.20,000 * 10% = Rs.2,000

This additional tax exemption can significantly enhance your overall returns.

Conclusion

LIC Infrastructure Bonds are an excellent choice for individuals looking to save on taxes while making a secure investment. With attractive interest rates and the added benefit of contributing to national development, these bonds offer both financial and social returns.If you’re considering investing in LIC Infrastructure Bonds or want more information about how they fit into your financial plan, visit mypaisa.in for detailed insights and assistance.

By investing wisely today, you can secure your financial future while helping India grow!