TO :
ITR Individuals
India
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.
|
SI |
Taxable Income * |
Tax Bracket |
Benefits from 80CCF |
|
1 |
0 to 160,000 |
0 |
- |
|
2 |
160,001 to 500,000 |
10% |
2,060.00 |
|
3 |
5,00,001 to 800,000 |
20% |
4,120.00 |
|
4 |
above Rs 800,000 |
30% |
6,180.00 |
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
CAclubindia
