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TO :

ITR Individuals




Hi All


Hope everyone is doing great & busy in  calculating risk & returns on Tax Investments. I know December & January months are meant for investment & reducing tax liability. Most of you had already thought of this new investment area which has given by our Finance Minister in Union Budget. He had introduced a new section 80CCF under the Income Tax Act, 1961 that provide income tax deduction of Rs. 20,000 in addition to Rs 1 Lakh available under other provisions for claiming tax deductions for investments made in the Long Term Infrastructure Bonds.  Please go through in detail & then plan for investments.

a) Which Long-term Infrastructure Bonds eligible for tax deduction?


Following entities are eligible to subscribe as long term infrastructure bonds and eligible for a deduction under new section 80CCF

1.     Industrial Finance Corporation of India (IFCI),

2.     Life Insurance Corporation of India (LIC), I

3.     Infrastructure Development Finance Company (IDFC) and

4.     Non-Banking Finance Company (NBFCs) who are classified as an infrastructure finance by Reserve Bank of India (RBI)

b) Benefits of Tax savings for Long Term Infrastructure Bonds

Any investment in long term infrastructure bonds up to Rs 20,000 is eligible for tax deduction from the taxable income.


Taxable Income *

Tax Bracket

Benefits from 80CCF


0 to 160,000




 160,001 to 500,000




 5,00,001 to 800,000




 above Rs 800,000




Taxable Income = Total Taxable Income after 80C deduction

c)  Lock-in period & Yield of the bond

These long term infrastructure bonds will be available for tenure of minimum 10 years and the lock-in period of 5 years. It means investors cannot exit from the bonds before 5 years and after 5 years they have an option to exit in the secondary market or via buyback offer given by the issuer. Investors can also pledge the bonds in some specified banks to obtain the loan against the bonds only after completing the lock-in period

d) Minimum Subscription Rs 5,000 per one bond


e) Rate Of interest 8% to 8.25%


f)  Form Can be held in Demat/Physical Form, D mat will not have Tax Deduction for Interest earned


PS : Do investment in Sec 80CCF bonds only if you have investment of Rs 100,000 or more (including PF & LIC). Otherwise do not think of Sec 80CCF for getting extra tax benefit.


Hope this letter will help you to reduce your burden of thinking too much on Sec 80CCF & hoping that you will take right step on the same. Do not forget to email me if you think that you got some points on Sec 80CCF so that it encourages people like me


Truely Yours

CA. Chikkerur CR

B.com, MBA, ACA , DISA & LLB

chidu_11@yahoo.com, chidu11@gmail.com

Published by

CA. Chikkerur C R
Category Income Tax   Report

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