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Life Insurance Corporation of India (LIC) is one of the financial institutions which have received permission from the Government of India to launch infrastructure bonds.
As per the norms, an individual can invest Rs. 20,000 in infrastructure bonds and save tax on the same. The tax savings will be over and above the 1,00,000 permissible under Section 80 ©. This tax saving would be under Section 80CCF.
The insurance regulator IRDA though has some concerns on insurance companies floating infrastructure bonds. LIC would then need the approval of the regulator before it can proceed with the bonds issue. It seems only equity is allowed as capital for insurance companies and not debt.
Infrastructure bonds can be attractive to high income individuals where they stand to get an additional Rs. 20,000 to invest and save tax over and above the normal avenues.