Developing an infrastructural facility in a country requires substantial funds, and the Government seeks potential investors to meet this financial requirement. Section 80CCF is a provision introduced in the Income Tax Act to attract such willing investors by providing certain tax incentives against investing in Government-backed infrastructure and other tax-saving bonds.
This provision is ideal for both investors and the Government, as the former can maximise their savings and reduce tax liability. At the same time, the latter can obtain the funds required to develop infrastructure and promote economic growth.
If you are willing to know more about this section, keep scrolling!
Section 80CCF has been introduced to allow individuals to enjoy additional tax deductions over and above those mentioned under 80C. Eligible individuals can claim a maximum deduction of ₹ 20,000 in a given assessment year as specified under Section 80CCF of the Income Tax Act. Investors can add this deduction with other available deductions, thus maximising savings on tax.
Individuals need to meet the following eligibility parameters to enjoy tax benefits under Section 80CCF of the Income Tax Act:
Investors need to furnish the following documents to claim tax deduction under Section 80CCF:
To understand how does income tax deduction under Section 80CCF works, let's take a simple example:
Mr Ashok earns a annual income of ₹ 5,00,000. According to the income tax slab, his taxable income equals ₹ 2,50,000. He invests in schemes to avail tax deduction up to ₹ 1,50,000 as mentioned under Section 80C. Besides, he invests ₹ 40,000 in government-approved bonds and can enjoy a tax deduction of ₹ 20,000 under Section 80CCF. Thus, his total taxable income in a given assessment year stands to -
|
Particulars |
Amount |
|
Annual income |
₹ 5,00,000 |
|
Deduct: Basic Exemption Limit |
- ₹ 2,50,000 |
|
Deduct: Deduction under Section 80C |
- ₹ 1,50,000 |
|
Annual Net taxable income |
₹ 1,00,000 |
|
Investment in government-backed bonds |
₹ 40,000 |
|
Deduct: Maximum deduction under section 80ccf (deduct from investment in government-backed bonds) |
- ₹ 20,000 |
|
Total taxable income of Mr. Ashok in a given assessment year (₹1,00,000 - ₹20,000) |
₹ 80,000 |
Keep the following pointers in mind before claiming tax benefits under Section 80CCF of the Income Tax Act:
Thus, go through these pointers about Section 80CCF carefully. Doing so will streamline the process of availing tax benefits and reduce tax liabilities under this section.
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Disclaimer: This information is added only for informative purposes and collected from different sources across the Internet. Digit Insurance is not promoting or recommending anything here. Please verify the information before making any decisions.
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