Thanks to corrective measures taken by government and international bodies to bring the economic recovery from recovery to growth phase. With this growing market most of has seen its impact on our incomes and salaries. Only one thing which we do not like about the growing salaries is the growing income tax liability of ours. But the recent changes in Tax provisions and through section 80CCF now we got one more avenue to save our taxes and get our money grow through safe-avenue with minimal risk.

Now, we can invest not only Rs 1 lakh and save tax of Rs 10,300 to Rs 30,900 depending on our tax slabs by making investments under Section 80C of the Income Tax Act (read… minimizing-tax-deductions-under-section-80c-part-1 … to know more about that) but also invest an additional Rs 20,000 in infrastructure bonds under Section 80CCF. In effect, people can now save an additional INR 2,060 to 6,180 from this year depending on their respective tax slabs. So if you earning monthly take home salary of more than INR 50,000 per month. It is a good option for you to buy such bonds to save taxes.

The interest rates offered by these bonds are linked to the 10-year government of India bond, and cannot exceed that. Since, the 10-year government bonds is close to 8% and the interest rate offered by L&T Infra issue, currently open, is between 7.5% and 7.75%, depending on the options you choose. How to select between different bonds offered before investing, consider its credit rating & the interest rate offered.

Applying for these infrastructure bonds is very easy. All one needs is a PAN card. You could hold the investment in physical certificates too, in case you do not have a demat account. In case you do have a demat account, it makes sense to hold these bonds in the demat form, as it eliminates the risk of losing paper or misplacing it. But this does not mean you should invest directly in Infrastructure bonds first take care of your investments under Section 80C before chasing infrastructure bonds.