FAQ on Infrastructure Bonds ..........

CA Sanat Pyne (F.C.A. & M.COM) (19992 Points)

13 November 2010  

FAQ on Infrastructure Bonds

What is the Tax Treatment of interest on these Bonds?

·         The interest received on these bonds shall be treated as income from any other source and shall form part of the total income of the assessee in that financial year in which they are received.

Who are the eligible investors?

·         Only Resident Indian Individuals (Major) and HUF can invest in these bonds.

Can a Minor apply for subscriptttion to these bonds?

·         A minor is not eligible to apply for subscriptttion to these bonds.

Are these infrastructure bonds Tax Free?

·         No, the interest received in these bonds is not tax free. The investor is liable to pay tax on the interest received

Will TDS be deducted on these bonds?

·         No TDS shall be deducted on the interest received as these bonds are issued Compulsorily in Demat mode and shall be listed on NSE & BSE.

I don't have Demat Account. Can I apply?

·         YES,But it is dependent on issuer if he allowed to so .Normally all issues have both options

I only have a joint De-mat account. Can I apply in my own name only?

·         The name of applicant shall be same as the holders of Demat account. In case of single applicant the demat account shall also be held in the name of the same single applicant.(physical form is also allowed now)

Can I apply in joint names?

·         Yes application can be made in joint names with a maximum of three applicants, however the demat account shall also be held in the joint names and order of applicant shall be the same as appearing in the demat account. In case of application made in joint names, the tax benefit shall only be availed by the first applicant.

What is the maximum amount for which the benefit u/s 80CCF be availed?

·         Maximum benefit to an investor shall be Rs. 20,000/-- under section 80CCF of the Income Tax Act, 1961

What would happen if I apply amount more than Rs. 20,000/-?

·         The allotment shall be made for the sum applied, however the benefit under section 80CCF may only be availed for a maximum sum of Rs. 20,000/-

Can I invest in all the four option?

·         Yes an applicant may subscribe to all the four options but the minimum application under each option shall be one bond i.e. Rs. 5000/-

What is the benefit of investing in Tax Saving Infrastructure Bonds if they offer the same tax benefit?

·         The Tax exemption benefit under Sec 80CCF on a sum of Rs. 20,000/- is over and above Rs. 1,00,000/- benefit under section 80C, 80CCC and 80CCD

What is the tenure & lock-in period of these Tax Free Infrastructure Bonds?

·         The Tenure of these bonds shall be 10 years and the bonds have a lock-in of 5 years

Who can offer these Long Term Infrastructure Bonds?

·         The entities like LlC, IDFC, IFCI and other NBFCs which are classified as Infrastructure Finance Companies by RBI shall be allowed to issue these long term infrastructure bonds.

I Don't have a PAN card. Can I still apply for subscriptttion?

·         PAN card is mandatory for subscribing to these bonds.

How will i get my interest on the due date?

·         The interest shall be credited to the respective Bank account registered with the Demat account through ECS on the due date for interest payment, and -if the due date is a public holiday then the next working date.

Can I get loan on these bonds?

·         You cannot avail of any loan pledging these bonds in the first 5 years. Thereafter, these bonds may be pleadged to avail of loans

Where shall I submit the application forms?

·         The application form may be submitted at the branches collecting banks whose addresses are mentioned on the application forms.

Who would get the interest in case of the joint application?

·         In case of joint application the interest shall be paid to the account of the first applicant only.

Can Intercity clearing cheques acceptable?

·         No, cheques has to be payable at par or local clearing cheques are only allowed.

In whose favour the cheque is to be made?

·         Cheques has to be made in the favour of "IDFC Infra Bonds"

Can Intercity clearing cheques acceptable?

·         No, cheques has to be payable at par or local clearing cheques are only allowed.

Can I accept NRI application?

·         No NRI's are not allowed to invest in this issue. Please check, NRIs on non-repatriate basis can apply

Shall I also submit the application forms with the collection Bank?

·         Yes

Can I accept Minor applications?

·         Minors are not allowed to invest in this Issue. So minor application even accompanied by Guardian is not acceptable.