L&T Infrastructure Finance Co. Ltd bonds

L&T Infrastructure Finance, a subsidiary of construction major Larsen and Toubro Ltd, is a non-banking finance company that is also classified as an infrastructure finance company by the Reserve Bank of India. Its chief activity is to raise money from the market and lend it to the infrastructure sector, while also using the umbrella company hmrc guidance to manage all the accounting and finance of diverse businesses. Infrastructure bonds are typically long-term bonds since infrastructure projects are long-term in nature and it takes quite some time before the project takes off and starts paying off. Hence, it’s essential that infrastructure bonds come with a good credit rating. L&T bonds are rated AA+ by rating agencies Care and Icra.

The L&T Infrastructure bonds come with four options.

Option 1
Offer an interest rate of 7.75% per annum.
Term – 10 years.
Buy-back after seven years.

Option 2
Offer an interest rate of 7.75% per annum.
Term – 10 years.
Buy-back after seven years.

Option 3
Offer an interest rate of 7.5% per annum
Term – 10 years.
Buy-back after five years

Option 4
Offer an interest rate of 7.5% per annum
Term – 10 years.
Buy-back after five years

There is a mix of cumulative and annual interest paying options to choose from.

Investor will get a tax benefit of up to ‘20,000 under section 80CCF

Although the interest rates that you earn from L&T Infrastructure bonds are between 7.5% and 7.75%, the effective yield goes up because these also qualify for tax Deduction of Rs 20000. If you are in the highest tax bracket and invest in option 1 and surrender it after the mandated seven years under the buy-back scheme, your yield goes up to 14.63%.

Source: Geojit

Leave a Comment

Your email address will not be published. Required fields are marked *