by harsh roongta ceo apnapaisacomit is almost that time of the year again when you need to submit proofs of investments made by you to make sure the tax deducted from your salary takes into account such investments infrastructure bonds are one of the investment options to save tax investments of up to rs 20000 in such bonds qualify for tax exclusion currently two companies are offering such bonds idfc and lt infrastructure finance both offering an interest rate of 9 per annum the terms of the two issues are very similar except that idfc bonds enjoy aaa rating whereas lt infrastructure finances bonds are rated aa the posttax returns in both cases work out to 1085 for those in the 1030 tax bracket 13 2060 tax bracket and 1556 tax rate 3090 the returns are definitely good this of course assumes that you will use the buyback facility provided by the company at the end of five years and that the tax rate will remain constant throughout the fiveyear period investment in infrastructure bonds makes sense for all tax payers given the good posttax returns but investments of up to rs 20000 per tax payer qualify for deductions beyond that there are several other debt options that provide better returns the only decision therefore that remains for the tax payer to take is should you invest now or wait for better yielding infrastructure bonds in the next quarter this question is natural given last years experience where those who waited till the last minute got better interest rates companies offer interest rates on the bonds based on the returns on comparable government securities for the prescribed period before the issue of the bonds the government securities market is very volatile and is expected to remain so hence it is difficult to predict whether future issues of such bonds are likely to carry the same or higher or even lower interest rates given the fact that this investment should be limited to rs 20000 it is unlikely to make a major difference either way to an investor and hence it is always better to get a highlyrated bond when available should you opt for the buyback option after five years or wait till the fiveyear lockin period is over and then decide whether to continue with the bond for a further period or opt for the buyback option your bonds will be priced at a premium if you continue with the bond and if the interest rates for a fiveyear bond are ruling lower than 9 at the end of five years you can however suffer a capital loss if you continue with the bonds at the end of five years and if the interest rates for such bonds is higher than 9 at that time given the low value of the investment vis vis a high taxpayers overall investment portfolio it is most unlikely that you will do a proper review before taking this decision hence make inertia work