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Infrastructure bonds are good for people who need a fixed income. They offer a decent rate of interest and tax benefits. The maturity of these bonds is often between 10 to 15 years with an option to buy-back after a lock-in of 5 years. These bonds are listed either on or both National Stock Exchange or Bombay Stock Exchange that provides you with an option to exit after the lock-in period. A Lock-in period is when you cannot sell a particular instrument.

What are the tax benefits?

• Investments up to Rs. 20000 are eligible for income tax deduction under Section 80 CCF of the Income Tax Act
• This is over and above the Rs. 1 lakh deduction available under Section 80 C.
• But interest income on the Bonds is applicable. (But no tax is deducted at source, if the annual interest is less than Rs. 5000).