Deduction under section 80CCF of Income Tax Act

Deduction under section 80CCF of the Income Tax Act is available on investing amount in to ‘long term infrastructure bonds’. The present article explains the provisions of section 80CCF.

Person eligible for deduction under section 80CCF

Deduction under section 80CCF is available to the following categories of persons –

• An individual; and
• A Hindu Undivided Family (HUF).

Deduction under section 80CCF

Deduction under section 80CCF of the Income Tax Act is available to an individual and a HUF who has invested an Amount up to Rs. 20,000, paid or deposited, during the previous years relevant to assessment year 2011-12 or 2012-13, as subscription to notified long-term infrastructure bonds.

Eligible Investment for Deduction under section 80CCF

In order to claim deduction under section 80CCF, one needs to invest in the Government approved ‘long term infrastructure bonds’.

Infrastructure bonds issued by the corporations like Industrial Financial Corporation of India; Life Insurance Corporation; Integrated Infrastructure Finance Company; non-banking financial institution are some of the bonds approved by the Government.

Specific conditions for claiming deduction under section 80CCF

• Deduction under section 80CCFis available only to the resident Indian. Meaning thereby that deduction under section 80CCF is not available to Non-resident Indian.
• Deduction under section 80CCFis available only to the individuals and HUFs. Meaning thereby that deduction under section 80CCF is not available to other categories of assessees like company, partnership firm, AOP etc.
• In case of Hindu Undivided Family (HUF), deduction under section 80CCFis available only to one member of the family.
• In case of joint investment (i.e. investment held in the name of two or more persons) is allowed as a deduction under section 80CCF. However, only one person i.e. the main stakeholder/ the first applicant is allowed to take the tax benefits (i.e. claim deduction under section 80CCF).
• Deduction is available only for A.Y. 2011-12 and 2012-13.

Maximum deduction under section 80CCF

The maximum amount of deduction allowable under section 80CCF cannot exceed INR 20,000.

Other important points worth noticing related to deduction under section 80CCF

It is important to go through the below mentioned points before opting to invested in the ‘long term infrastructure bond’ for claiming deduction under section 80CCF –

• The term period (maturity period) of the long term infrastructure bond is generally 10 years.
• The lock in period of such long term infrastructure bond is 5 years.
• The interest received on such long term infrastructure bond is taxable under the head ‘Income from Other Sources’.

Frequently Asked Questions (FAQ) on deduction under section 80CCF

1. What is Section 80CCF?

Section 80CCF is deduction available to an individual and a Hindu Undivided Family (HUF) on the amount paid / deposited to ‘long term infrastructure bonds’ which are approved / notified by the Government.

2. How can I buy Section 80CCF infrastructure bonds?

The investors having a demat account can buy the infrastructure bonds by applying online.

3. What is long term infrastructure bonds 80CCF?

Infrastructure bonds issued by the Government approved companies are termed as ‘long term infrastructure bonds’ investing into which qualifies as a deduction under section 80CCF of the Income Tax Act.

4. Is Section 80CCF part of Section 80C?

Section 80CCF is one of the sub-section of section 80C of the Income Tax Act. Section 80C contains a long list of deduction available to the assessee under income tax.

(Article is republished with amendments considering the feedback received from our readers.)