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Section 80CCF – Save Income Tax (IT) through investment in infrastructure bonds

Budget 2010 has introduced one more avenue for you to save tax – Infrastructure Bonds. This article explains the detailed provisions for this.

We know that Section 80C is a tax-payer’s best friend – it allows for deduction of money invested in certain avenues.

(To know all about tax saving through section 80C, please read “Saving Income Tax – Understanding Section 80C Deductions”)

Of course, there are some other avenues for saving income tax as well – like making donations (Sec 80G), buying health insurance (Sec 80D), etc.

(Please read “Reached Section 80C limit? You can still save more income tax” to know about all the avenues to save income tax)

Budget 2010 has introduced one more way to save tax – investment in infrastructure bonds. This has been made possible through a new section, Sec 80CCF.

 

How much can you invest?

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.

Please remember that this is over and above the Rs. 1,00,000 allowed under Section 80C.

(To know all about tax saving through section 80C, please read “Saving Income Tax – Understanding Section 80C Deductions”)

 

How much tax can you save?

Since the amount is deducted from your taxable income, the income tax you save would depend on the tax slab you fall under.

(To know the income tax slab applicable to you, please read “Income Tax (IT) Slabs / Brackets and rates”)

If you fall under the highest tax slab of 30%, you would end up saving about Rs. 6,000 in income tax.

 

Which infrastructure bonds qualify for investment?

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.

 

What is the tenure of these 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.

 

What would be the rate of interest?

The bonds are likely to carry an interest rate of 7.00 – 7.50%. Bonds issued by private companies are expected to offer a slightly higher interest rate of 8.00 – 8.50%.

 

Is the interest from these bonds taxable?

Yes, just like tax-saving fixed deposits, the interest earned from these infrastructure bonds would be taxable.

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  1. i want buy a infra bonds for tax saving plz suggest how to buy and whre to buy?

  2. Mehul Makwana says:

    Hi,

    From where these infrastructure bonds can be purchased.
    Is it safe to get if fom private players

    Mehul Makwana

  3. Prem GOyal says:

    Please clarify are Income tax rules are different from state to state in india for different govt. deptts. for exemple education
    deptt. in punjab/haryana employees.I understand govt. school
    teachers are not allowed house rent & conveyance expences
    etc.rebate under section 10 are not allowed.pl.clrify.

  4. Manjula,

    We can not invest the additional 20000 under 80C it must be under 80CCF only..

  5. Manjula says:

    Does this mean the investment (of 20,000) should necessarily be in infrastructure bonds(section 80CCF) or can we save all of the 1,20,000 under section 80C itself? Please clarify.

  6. Anonymous says:

    there is no infra bond that qualifies for sec 80c.one can buy these bonds if they have made a long term capital gain to get rebate on LTCG tax.infra bond investment deduction from yuor income can be claimed under 80ccf.

  7. BISWARUP BANDYOPADHYAY says:

    What are the companies/organizations offer this Infra Bond?

  8. vishal goenka says:

    Which are infrasture bonds qualify for 80cf? Bonds through NHAI and REC does qualify for it ?

  9. jatin shanbhag says:

    To buy the infrastructure bonds, got to icici bank or idbi bank and request for the forms

  10. I would like to sell my equities worth Rs. 15 lacs( on date).I have to pay LTCG tax for this.My income for fy 2010-2011 will be around 2.3 lacs excluding the LTCG.
    My savings in PPF & LIP are 70000/- & 15000/- respectively.
    Should I invest in infrastructure bonds to get rebate?

  11. M.Sankara Rao says:

    From Where to Buy This Infrastructure Bonds ?
    Please tell me that, How i buy these Infrastructure Bonds and from where ? Who sell this Infrastructure Bonds ?

    Please suggest me.
    Thanks

  12. Please tell me that, How i buy these Infrastructure Bonds and from where ? Who sell this Infrastructure Bonds ?

    Please suggest me.
    Thanks

  13. MY FATHER IS A RETIRED PROFESSOR AGED 83.TILL DATE HE PAYS INCOME TAX PROPERLY.
    MY QRY IS HE ELIGIBLE TO CLAIM REBATE UNDER 80 CCF FOR HIS INVESTMENT IN IFCI BOND RS 20,000/-
    APART FROM RS 1 LAKH 80 cc

  14. Amit Surpuriya says:

    For Application of Infrastructure Bonds – Contact – Amit Surpuriya – 9850873688 – Pune

    KSHITIJ FINANCIAL SERVICES
    Mutual Funds | Infrastructure Bonds | 54EC Capital Gain Bonds | Tax Planning | Company Fixed Deposit | Debentures

  15. Suppose I invest Rs 120000 in infra bonds what is the max tax deduction possible. I do not have any under sec 80c

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  19. Thanks for sharing your thoughts on income tax. Regards

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