Invest in Infrastructure bonds – Get Extra Benefit of Deduction

80CCF offers a deduction of Rs.20000 from your taxable income for investments in long term infrastructure bonds. This deduction will be over and above the existing overall limit of tax deduction on savings of upto Rs.100000 under section 80C, 80CCC and 80CCD of the Act. In other words a taxpayer can get a straight away deduction of Rs.120000 from his net income. The benefit of saving tax through Infrastructure Bonds is available for Individuals and Hindu undivided families. Key Features:

  • These bonds will have tenure of 10 years and a minimum lock in period of five years.
  • Bonds issued by Industrial Finance Corporation of India, Infrastructure Development Finance Company and other RBI classified infrastructure finance companies – would qualify for tax benefits under Section 80CCF.
  • The rate of interest of infrastructure bond under section 80CCF is varying from 7.5% to 8% per year. TDS (Tax Deducted at Source) will not be deducted at the time of payment of interest.
  • Minimum investment required- Rs.5000 and no maximum limit on such investments. However deduction of Rs.20000 will be available.

Implication of investment in such bonds:

  • From government perspective, it is an initiative to promote investment in the infrastructure sectors as it will generate revenue in the economy. Government is encouraging investors to make investment in such bonds and earn higher rate of return.
  • It is very beneficial to individuals, especially to newly employed as it helps in long term planning. Moreover the lock in period is less as compared to the lock in feature of PPF/ GPF or LIC policy maturity period.
  • It is very beneficial to those whose income falls in the 30% tax bracket. For example, if taxable income is above Rs.800000 then an investment of Rs.20000 in Infra Bonds would save tax upto Rs.6000.

Hence individuals should avail this opportunity of reducing their tax burden and secure their future. has the domain expertise in providing comprehensive taxation issues to individuals in India and abroad.

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