Close on the heels of the IDFC Infrastructure bonds – L&T is also issuing infrastructure bonds beginning October 15th 2010, and closing on November 2 2010.
L&T Bonds: Tax Saving Infrastructure Bonds
These are classified as infrastructure bonds under Section 80 CCF which means that investing in them will reduce your taxable income by Rs. 20,000.
This increases your effective yield because along with the interest you earn on these infrastructure bonds, you save on tax as well.
These bonds are good for a maximum of Rs. 20,000 as far as the tax saving aspect is concerned, so if you buy bonds worth Rs. 30,000 and nothing else, even then the maximum you can reduce from your taxable income is Rs. 20,000 because that is the cap on tax benefits on infrastructure bonds.
L&T Infrastructure Bonds Features
There are 4 series of L&T Bonds, and though these bonds have a term of 10 years, there is an option of a buyback after 5 years or 7 years.
The interest rates, and effective yields of different plans are shown below:
| Series | Tax Bracket | 1 | 2 | 3 | 4 |
| Face Value | —- | Rs. 1,000 | Rs. 1,000 | Rs. 1,000 | Rs. 1,000 |
| Interest Payment | —- | Annual | Cumulative | Annual | Cumulative |
| Interest Rate | —- | 7.75% | 7.75% | 7.50% | 7.50% |
| Maturity | —- | 10 years | 10 years | 10 years | 10 years |
| Buyback in years | —- | 7 years | 7 years | 5 years | 5 years |
| Yield on Buyback | 30.9% | 15.23% | 13.59% | 17.20% | 15.75% |
| 20.6% | 12.31% | 11.36% | 13.42% | 12.58% | |
| 10.3% | 9.86% | 9.44% | 10.23% | 9.86% |
L&T Bonds Minimum Investment
The minimum investment needed for you to invest in these bonds is Rs. 5,000 because you have to apply for a minimum of 5 bonds, and the face value of each bond is Rs. 1,000.
Open and Close Date
Subscription opened on October 15th, and will close on November 2nd 2010.
Credit Rating
The L&T bonds have been rated CARE AA+ by CARE and LAA+ by ICRA which indicate high credit quality and that the rated instruments carry low credit risk.
How can you invest in the L&T Infrastructure bonds?
You can invest in these bonds either in the physical form or electronically through brokers like ICICI Direct. You can buy a form through one of the several agents across the country and invest in it through them as well.
Here is a list of banks listed on their website that can give you more information as well:
- Axis Bank
- DBS Bank
- HDFC Bank
- HSBC Bank
- ICICI Bank
- IDBI Bank
- ING Bank
- SBI Bank
They also have this cool link on their special website for this bond where you can enter in your contact details and they will contact you and help you.
If any of you do decide to contact them then I am really interested to know your feedback because I tried to get in touch with the numbers given in the IDFC website, and tried at least 10 times to no avail. I’d like to know if this is any better.
Tax on interest earned from the L&T Infrastructure bond
The interest itself is not tax free. It’s only the Rs. 20,000 you get reduced from your taxable salary that helps save tax.
L&T Infrastructure bonds to list on NSE after 5 years
The Bonds are proposed to be listed on NSE, and can be traded after the initial 5 years lock-in period. After this lock-in period, the holders can also pledge the Bonds with banks for availing financial assistance.
You don’t need a demat account to invest in these bonds
L&T will offer you the option to hold the Bonds either in Dematerialized or Physical Certificate form.
NRIs can’t apply in the L&T Bonds
Non-resident investors including NRIs, FIIs and OCBs are not eligible to participate in the Issue.
Conclusion
These were some salient features of the L&T bond issue, and I hope you found this useful in order to make a decision on whether you want to opt for them or not. Keep in mind that IDFC has a similar issue running, and if you have already applied for that then you won’t get any additional tax benefit (over Rs. 20,000) by applying for this issue as well.
If you have any questions, leave a comment, and the community here will try to answer them for you.
Ladies and Gentleman,
If u ve no doc to show for investment proof,there is a good news for you. You can write to [email protected] and [email protected] will mail the e-invoice in a day.I got the same and it also stated about the 80CCF.So mail it get it..
Hi All,
Good news for all who have not recd the physical bond yet and if they want to get the same through e-mail for investment prooof purpose.
You can write mail to [email protected] cced to [email protected] stating your application number and they will send you the scanned copy of the allotment.This also states about the 80CCF benefits.I got the copy within a day..so i thought it would be useful for other seekers also.
Thanks for sharing this Purna – this will surely be useful to a lot of folks – thank you!
I have purchased L&T Infrastructure bond thro ICICIdirect to get rebate u/s 80CCF. Pl advice how to get receipt of this bond as bond is credited in my demat.
i have invested $10000 in l&t infrastrure bond in demat a/cof sbisecurities on2dec message has come in my mobile(9464844828,pb)that these are being criedted in to my demat account no. but demat does not show this sofar what should i do now to get tax benefit
Hi,
Am planning to invest in Infra bonds in Jan or Feb. Is there is any Infra Bond issue open currently or anything due in Jan/feb. pls let me know.
thanks,
Srini.
Nothing has been announced yet Srini, but IDFC, LIC, and a few others have plans to launch their funds in the last quarter, so you can expect to see more issues in Jan, Feb or even March.
I have this post which I will update when I read or hear anything about these infra bond issues, so you can check them once in a while or set a Google alert or something that notifies you.
http://www.onemint.com/2010/11/20/infrastructure-bonds-calendar/
Thanks for the note.. Manshu !
By the way , pls keep us updated on any new bond issues.
thanks,
Srini.
Thanks Srini – there is a post here on which I am tracking new bond issues. It can be found here:
http://www.onemint.com/2010/11/20/infrastructure-bonds-calendar/
Hey Srini – A reader just left a comment, and informed that IFCI has extended their date to 12th January 2011, so if you’re interested in that one you still have time.
my present address is as follows:- shyam lal joshi s/o amolak chand joshi
outside of mehta market, naya bas, near krishna kunj, jodhpur (raj)-342001
so please provide the l&t infra bond at this address immediately……..
Mr. Joshi – you have left a comment on a site that is not related to L&T and therefore that will not do you any good. Talk to your agent about the address change, and they will send whatever it’s to be sent.
Invest in L&T Infrastructure-dividend on 18th Dec …then got a mail that requestion is processed on 20th Dec but still not getting the statement.Please do the need ful…….or tell me wat to do for further progress.
You need to get in touch with the agent or bank that sold you this Piyush, and they will do the needful for you.
Please inform me when the bonds receipts are provided
A lot of people have already received it, so please check with your agent or bank on why you haven’t received it yet.
I have invested in L&T Infra Bonds through ICICI Direct but have not received anything till now…Can anyone give an idea, by when can I expect to get the bonds in my account?
It should have showed by now Ruchika. Did you get any SMS or any other notification for the allotment?
Nothing!!!
Just try this path, and see if you’re able to see the bonds by navigating like this (Reader Brine had left this in a comment earlier):
1. Log in to http://www.icicidirect.com.
2. Click on FD/Savings.
3. Click on hyper link FD/Savings Demat balance.
If you’re still not able to see them then call ICICI Direct, and inquire about how you can see this in your holdings, as it’s been credited for other people – they should have an answer on what happened to your case. If possible, please do leave a comment here sharing your experience for others to get some pointers.
I called the ICICIDIRECT Customer Service. The investment can be seen in ICICIBank account -> Demat -> Holdings section.
So that means you were able to locate your bonds Ruchika? I hope that’s the case, and if so, then congratulations on not having to deal with this headache!
I could locate them! Thanks Manshu for all the help!
Thanks for replying Ruchika – I’m glad you were able to find it. I had it in my mind to tell you to look through your bank account as well, but for some reason didn’t write it. If I had done that it would have saved you a phone call :-
Hi,
I am also n0t yet received any document for proof submitting.
I have invested Rs 20,000 in LT Infrastructure bonds through my HDFC demat account. But I am yet to get any document to claim tax deduction.
Can any one help me on this.
Hi
Today i invested 5k for L&T Infrastructure fund tax saver – Dividend . I invested thru HDFC natbanking online by approaching L&T site . Now it ask me to send the Print out with Signature on the Given Address of Chennai. So i will do that on Monday by courier.
So my concern is how can i get the statement for the same as need to show @ office for Tax Submission before 28th Dec.
Any in my case to whom i need to discuss or concern as there is no agent or anyone for me as i have done my investment thru HDFC Bank.
Hi Piyush,
I’m not sure which fund this is because L&T Infrastructure Fund doesn’t seem to be a tax saver fund, and I didn’t find any reference to a infrastructure tax saver fund.
But in any case – your best bet is to call up the helpline of L&T MF (here is the number: 1800-209-6565) and discuss your concern with them.
I have purchased L&T Infrastructure bond thro ICICIdirect to get rebate u/s 80CCF. Pl advice how to get receipt of this bond as bond is credited in my demat.
Got L&T bond physical certificate today. Had applied for physical bond on 25th oct.
That’s great! Thanks for the info Sidd.
hi, i got the bonds tagged to my demat account but i have not recd the physical copy..can u pls help me out how can i get or with whom i should contact..thanks..
People have only started receiving the physical allotment letters, so it might just be a matter of time before you get them. However, you can always contact your broker, or agent who sold you this, and check with them on what they have to say.
Got L&T physical bond certificate yesterday(9-12-10). Had applied for physical bond on 24-10-10.
Awesome! Appreciate your comment Guru!
Dear sirs, I HAVE TAKEN 20NOS X 1000/- BONDS (APPLICATION NO 4 -3312247 )DT 1-11-2010BY CHEQUE PAYMENT . WHEN I GET PHISICAL BOND CERTIFICATES?
There’s really no communication on that so no one can say for sure, but looking at the IDFC trend it might take a three to four weeks.
Can anybody tell me when I will get the Physical Bond certificate of L&T Infra?
Mayank
Hi Mayank, Maruti, A reader has reported today that they got a SMS that the bonds have been credited, so you can check your demat account to see if you received the bonds or not. If they are not there then expect them to show up in the next few days.
when will i get physical bonds of L & T infra bonds i have to declare them in tax saving by 20 december
I’d invested Rs. 10,000 through Bajaj Capital for L&T Bonds in demat form. I did not get back the acknowledgement slip of the application. (I’ve the application and cheque nos. though.) The cheque has been encashed from my account a few weeks ago.
1. Is there any news on the date by which these bonds will reflect in my Demat Ac?
2. For income tax purposes, what is the proof of investment I should show my employer?
1. So far, I haven’t come across any news on when they will start showing up on the demat account.
2. in the case of IDFC bonds, they have sent a physical document which can be used, and some people have also been told by Sharekhan I think it was that they can take a copy of their demat holding page that shows that they own this bond, and show it as a tax proof.
Hello,
I have invested Rs. 20000 in L&T infra bond. Can some body tell when i will receive the physical copy of the bond? I need now, can you please suggest whom should i contact?
Thank you.
I don’t think there has been any news on when this will be credited Siva, and you can try and contact your agent and broker to see what they have to say, but it’s unlikely that you get the physical copy of the bond before the company actually starts issuing them.
Hi Shiva,
Did you get the physical bond? I have invested in this and I am yet to get the physical bond.