Additional Income Tax exemption under Section 80CCF

Readers might be aware Finance Minister in his budget proposal 2010 announced that in addition to regular savings for deduction from income to the tune of Rs.1,00,000/- under Section 80C, 80CCC, 80CCD, deduction to the tune of Rs.20,000/- will be allowed for the amount invested in infrastructure bonds infrastructure bond, income tax exemption under Section 80CCF income tax act, nbfc companies no

Now, Government has issued an official notification to this effect (Notification No. 48/2010[F.No.149/84/2010-SO(TPL)], dated 9-7-2010).

As Planning Commission is considering to step up investment in the infrastructure sector to USD 1 trillion in the 12th Plan (2012-17) from USD 500 million in the current plan, this concession by way of tax exemption is provided to boost investments infrastructure activities in India.

As per this notification, new infrastructure Bonds issued by LIC,IFCI,IDFC and other NBFC classified as infrastructure company and approved by RBI are covered u/s 80 CCF of Income tax Act for income tax exemption for income up to Rs.20,000 in a financial year. An Individual or HUF can invest in these new infrastructure Bonds. Main features of this new provision of Income Tax Act are as follows.

  • New section can be availed by individual or HUF only.
  • Rs. 20000/- can be invested in a Financial year to avail deduction under section 80CCF
  • Rs. 20000/- Limit is in addition to 100000/- Limit of section 80C,80CCC,80CCD
  • Tenure of the Bonds will be 10 Years.
  • However Lock in period is 5 years, after 5 years investor can withdraw money from the bonds.
  • After lock in period ,Investor can take loan against these Bonds.
  • Issuer of the Bonds is LIC,IFCI,IDFC and other NBFC classified as infrastructure company.
  • Permanent account Number is must to apply for these bonds.
  • Yield of the bond – The yield of the bond shall not exceed the yield on government securities of corresponding residual maturity, as reported by the Fixed Income Money Market and Derivatives Association of India (FIMMDA), as on the last working day of the month immediately preceding the month of the issue of the bond.

For more details download Income tax Notification No: 48/2010[F.No.149/84/2010-SO(TPL)], dated 9-7-2010

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