Income Tax deductions under Sec 80 CCF
Till last year income tax deduction were allowed upto a limit of Rs 1 lakh under Section 80 C and Rs 15000 under Section 80 D. However as per the new rules, government has introduced another section 80 CCF, which allows you to claim tax deduction on investment of upto Rs 20000 in Long Term Infrastructure Bonds.
The deduction will be over and above the existing overall limit of Rs. 1,00,000/- available under section 80C, 80CCC and 80CCD of the said Act on savings and other prescribed investments. This amendment takes effect from 1.4.2011 and is applicable for the subscriptions to eligible/notified infrastructure bonds made during the Financial Year 2010-11
.
Infrastructure bonds will have a maturity of 10 years and a five-year lock-in period. IFCI had launched the first such tax-saving infrastructure bond.
The deduction will be over and above the existing overall limit of Rs. 1,00,000/- available under section 80C, 80CCC and 80CCD of the said Act on savings and other prescribed investments. This amendment takes effect from 1.4.2011 and is applicable for the subscriptions to eligible/notified infrastructure bonds made during the Financial Year 2010-11
.
Infrastructure bonds will have a maturity of 10 years and a five-year lock-in period. IFCI had launched the first such tax-saving infrastructure bond.
Here are a few facts which you must know to benefit from this newly introduced option of saving tax :
1. The deduction of Rs. 20,000 under section 80CCF is over and above the deduction of Rs. 1,00,000 available under section 80C, 80CCC and 80 CCD.
2. Investment in Infrastructure Bonds is specially beneficial for those who have already exhausted the Rs. 1,00,000 limit.
3. The benefit of saving tax through Infrastructure Bonds is available for Individuals and Hindu undivided families(HUF).
4. The face value of each bond is Rs. 5,000 and it is being issued at par value.
5. A minimum investment of Rs. 5,000 is required i.e. 1 bond and further investment can be made in multiples of 1 bond.
6. There is no upper limit on the amount of investment, however, a maximum of Rs. 20,000 only can be claimed as deduction as under section 80CCF
7. The tenure of the bond is 10 years
8. There is a lock in period of 5 years if you want to avail the tax benefits under section 80CCF.
9. The bond issue can be broadly classified into 2 categories
a. With a Buy back option
b. Without a Buy Back option
10. The Buy Back option will be available from 5th year onwards i.e. from 2015.
11. The Rate of Interest on bonds with a Buy Back option is 7.85% and for other then Buy Back option is 7.95%
12. Interest shall be taxable but there shall be no TDS.
13. These bonds are also available in Cumulative and Non-Cumulative options.
14. In case of Non-Cumulative bonds, the interest shall be paid annually and the bonds shall be redeemed at par
15. In case of Cumulative bonds, the maturity value shall be at par, along with the accumulated interest.
16. In order in invest in these bonds, you must have a demat account, as the allotment will be made in demat mode only.
17. Details provided in the application form should match with those of the demat account e.g. Name, PAN, DP name , DP id etc.
18. The application money should be paid through ECS,at par cheque or demand draft only, and not in cash.
19. 31st August, 2010 is the date on which the issue is closing i.e. the last date for investing in these bonds.
20. 15th September is the deemed date of allotment.
Investment in these Infrastructure bonds will not only provide you an extra tax saving avenue where you can claim deduction upto Rs. 20,000 and save tax amounting to Rs. 2,000-6,000, but will also earn an interest @ 7.85%-7.95% .
Eligible Long Term Infrastructure Bonds:- Long Term Infrastructure Bonds issued by the following agencies would qualify for tax benefit under section 80CCF.
Industrial Finance Corporation of India
Life Insurance Corporation of India
Infrastructure Development Finance Company
Any non-banking finance company which has been classified as an infrastructure finance company by the Reserve Bank of India.
Assured Returns
An investment in infrastructure bond assures you a reasonable rate of return. So as an investor you are guaranteed peace of mind over your investment