3.There is no lock in period for FDs.
4.Interest on fixed deposits is taxable.
5.Maximum interest offered in fixed deposits is mostly up to 9%.
6.Senior citizens are offered concessional added interest on different maturities.
When can an infrastructure bond be considered a better investment option?
Before infra bonds were introduced as tax saving instruments, investment only upto Rs 1 lakh was considered exempted from income tax. People falling in the highest tax bracket (30%) could save a maximum of Rs 30,900 in tax. Now with addition of infra bonds to this segment, the highest tax payers can save another Rs 6180 as tax from this year. Thus it is advisable to this section of tax payers.
It is advised that tax payers in the 20% bracket should consider investing in these bonds only when their Section 80C limit has crossed.
Tax payers in the lowest tax bracket are however advised that if they are indeed looking for long term investments, then it is better to look for other options like PPF before opting for these bonds as returns in PPF are not taxable. Senior citizens are advised to opt for annual payout of returns.
Companies offering infrastructure bonds:
1.Industrial Finance Corporation of India (IFCI)
2.Life Insurance Corporation of India (LIC)
3.Infrastructure Development Finance Company (IDFC)
5.Power Finance Corporation (PFC)
6.Rural Electrification Corporation (REC)
7.India Infrastructure Finance Company Limited (IIFCL)