Deduction under section 80CCF

Section 80CCF: Infrastructure Bonds – (maximum Limit Rs. 20,000) 


Budget 2010 has introduced one more avenue for you to save tax – Infrastructure Bonds

An investment upto a maximum of Rs. 20,000 in infrastructure bonds would be deductible from your taxable income. Thus, your taxable income would reduce by the investment you make in these infrastructure bonds, subject to an upper limit or ceiling of Rs. 20,000.

In accordance with Section 80CCF of the Income Tax Act, the amount, not exceeding Rs. 20,000 per annum, paid or deposited as subscription to Long Term Infrastructure Bonds during the previous year relevant to the assessment year beginning April 01, 2011 shall be deducted in computing the taxable income of a Resident Individual or HUF.

Please remember that the deduction with the investment in these Bonds is over and above the tax deduction of Rs. 1,00,000 available under Section 80C, 80CCC and 80CCD read with Section 80CCE.

The budget did not specify the exact bonds that qualify for investment under section 80 CCF – these would be notified by the government from time to time.

However, infrastructure bonds issued by both public sector / state owned companies as well as private sector companies would qualify for investment under this section. This is unlike the past trend – till now, only government entities were allowed to issue infrastructure bonds.

The money raised through these bonds would be primarily invested in infrastructure projects – building of roads, ports, airports, power plants, etc. These investments are of long term duration, and therefore, these bonds too are expected to have long tenures – 10 years or more.