infrastructure bonds

Provident Fund (PF) & Voluntary Provident Fund (VPF: PF is automatically deducted from your salary. Both you and your employer contribute to it. While employer’s contribution is exempt from tax, your contribution (i.e., employee’s contribution) is counted towards section 80C investments. You also have the option to contribute additional amounts through voluntary contributions (VPF). Current rate of interest is 8.5% per annum (p.a.) and is tax-free. Full Article

Section 80C replaced the existing Section 88 with more or less the same investment mix available in Section 88. The new section 80C has become effective w.e.f. 1st April, 2006. Even the section 80CCC on pension scheme contributions was merged with the above 80C. However, this new section has allowed a major change in the method of providing the tax benefit. Section 80C of the Income Tax Act allows certain investments and expenditure to be tax-exempt. Full Article

Under Section 80CCF, any individual or Hindu undivided family can invest up to Rs 20,000 in infrastructure bonds and avail of tax benefits. This will be over the Rs 1-lakh deduction allowed under Section 80C. So, an investor in the tax bracket of 30 Full Article

These bonds can be issued by entities such as LIC , IDFC, IFCI or any other NBFC as classified by the RBI. Earlier in September, IFCI had issued these bonds on a private placement basis. Now, IDFC has decided to offer the first tranche of these bonds Full Article

In a major fillip to the success of infrastructure bonds, the government has decided to exempt them from getting the credit ratings -- which are mandatory for all the other kinds of bond issuances. Full Article

All we need to do is to bring some changes in our habits and do the tax planning for the financial year 2009-10 in advance. Moreover before one decides for tax saving one should look into the all the list of probable deductions under which one gets benefits of tax saving. Full Article