Time is Running out

Tax Planning with ELSS and INFRA BONDS

As you know, now only few days are remain left to grab the opportunity of the Tax savings U/s. 80C and 80 CCF of IT Act.

Under Section 80C of Income Tax Act, Certain Investments are deductible ( Up to a Maximum of Rs. 1,00,000/- ) from your Income. This Tax Break is available in all Tax Brackets, and this is one of  the easiest form of the Tax Planning.

The instruments eligible for deduction under Section  80C fall into Two broad categories:

(A). Fixed Rate Instruments, which offer fixed returns and are suitable for conservative, risk-averse investors. Here primary attraction is the safety – the deposits are insulated from market fluctuations. Such instruments typically offer annual after-tax rates of return in the range of 5% to 10%. It includes,

(1). Tax saving Fixed Deposits

(2). National saving Certificates

(3). Post Office Term Deposits etc.

(4). Public Provident Fund – PPF

(5). Senior Citizens Savings Scheme.

(6). Employee Provident Fund - EPF

(7). Guaranteed Annuity Plan from Life Insurance Companies.

(8). Guaranteed Return Endowment Plans from Life Insurance Companies.

(2). Market – Linked Investments, which offer the potential of higher returns, are also exposed to higher risk. The Three important types are Equity Linked Saving Scheme (ELSS) ; Unit Linked Insurance Plan (ULIP) and Retirement or Pension Plan from Mutual Fund.

Market-linked instruments such as ELSS ; Ulips and Pension plans Of Mutual Funds are usually investments in equity markets – equity markets are volatile, so such schemes are expose to potentially higher market risk. How ever historically, on a long term basis, the rate of return on equity has out-paced inflation, and market investment has contributed significantly to investor wealth.

Under Section 80CCf of Income Tax Act, Certain Investments are deductible ( up to a maximum of Rs.. 20,000/- ) from your Income. This Tax Break is available in all Tax Brackets.

The instruments eligible for deduction U/s. 80CCF is only Infrastructure Bonds.

It is said that “ Timely Planning of financial matters not only helps in reducing Tax Liabilities, but also in creating opportunities to build  Wealth.”

In this context Infrastructure (Infra) Bonds offer an attractive investment options to investors.

Section 80CCF of an Income tax Act provides an additional deduction of Rs. 20,000/- ( Over and above the Rs. 1,00,000/- allowed under Section 80C ) from the taxable income of an individual for investing in long term Infra Bonds. So if you are in 30% tax brackets you can save up to Rs.6180/-.  by investing in these Bonds.

These bonds come with some unique features,

Ø      Tenure – 10 Years

Ø      Lock-in Period – 5 Years

Ø      Rate of interest – Fixed

Ø      Easy Liquidity –  Trading through stock Exchange

See below web page for Comprehensive article about Infrastructure bonds :

http://jigisha-shah.blogspot.in/2012/01/how-to-select-infrastructure-bond.html

Now currently there are only below mentioned Infra Bonds are available in the Market and they are, it’s so close to March 31^st.

( 1 ). IFCI Infra Bonds – Series V.

( 2 ). PFC Infra Bonds.

( 3 ). PFS Infra Bonds

( 4 ). IDFC Infra Bonds – Tranche III.

I here with posting,

The Calculation Sheet of all above mentioned Infra Bonds ( Currently Open )


http://www.box.com/s/7aa8489d6bb0a81a30c8

A wonderful Explanation and calculation of how you will get the Tax Saving by making the combination  of investments of ELSS (u/s 80C ) and Infra Bonds (u/s 80CCF) - The details are for the Category : 1( Male - Individual and HUF ) below 60 years

http://www.box.com/s/3b299e4fa8aae143f544

Calendar Of All Infrastructure Bonds ( Accounting Year 2011 – 2012 )


http://www.box.com/s/a6e139799f13ec88ee66

Flowchart Of Sec.80C & 80CCF.

http://www.box.com/s/a4fc6e4e7cb74b65fb30

Till next time , Money Happy Returns.

Date : 21/03/2012.


Jigisha Nikhil Shah

Blog : http://jigisha-shah.blogspot.in/

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È: +91 98796 85266

8 : jigisha201053@gmail.com

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