Section 80CCF of the Income Tax Act Explained

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!

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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:

• An Indian resident qualifies to avail tax benefits under this Section.
• Individuals and Hindu Undivided Families can enjoy tax deductions. No companies, organisations, or firms are eligible to avail tax deductions under Section 80CCF of the Income Tax Act.
• An individual can invest in government-approved infrastructure bonds jointly with another investor. However, only the primary stakeholder can claim tax deductions.
• Investors need to invest in infrastructure bonds issued by the Industrial Financial Corporation of India, Life Insurance Corporation, Integrated Infrastructure Finance Company and government-backed NBFCs.
• Only adult taxpayers can claim tax benefits under Section 80CCF.

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Investors need to furnish the following documents to claim tax deduction under Section 80CCF:

• PAN card
• Government-approved identity proof
• Details of bank account (if required)

Keep the following pointers in mind before claiming tax benefits under Section 80CCF of the     Income Tax Act:

• The interest made from government-approved infrastructure and other tax-saving bonds is taxable.
• These bonds have a tenure above 5 years. In most cases, the lock-in period of these bonds is 5 years. After the expiry of this lock-in period, individuals may sell these bonds.
• Individuals can invest through Demat or physical form.
• Investors can invest in multiple bonds, but the maximum deduction limit in an assessment year will remain the same.
• Only one member in a Hindu Undivided Family can enjoy tax benefits under this Section.

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.