Section 80CCF

What is Section 80CCF?

Section 80CCF of the Income Tax Act offers a tax benefit for investments in notified infrastructure bonds. This section allows taxpayers to reduce their taxable income by up to ₹20,000 beyond the usual Section 80C limit. It was introduced to encourage investment in infrastructure and support economic growth. Investing in these bonds not only provides tax savings but also helps develop essential public projects.

IMPORTANT NOTE: 

• This tax benefit is available only with the old tax regime. New tax regime does not provide many of the previously available benefits.

• You can use an income tax calculator to compare the impact of both regimes on your savings.

Key Features of Section 80CCF

• Introduction and Purpose: Section 80CCF was introduced in the 2010 budget and implemented in 2011 to encourage investments in tax-saving infrastructure bonds.

• Additional Deduction: Offers an extra tax deduction of up to ₹20,000 on investments made in notified infrastructure bonds.

• Separate from Section 80C: Deduction under Section 80CCF is over and above the ₹1.5 lakh limit set by Section 80C.

• Investment Options: Applies only to investments in government-specified infrastructure bonds.

• Eligible Investments: The deduction is available for investments in government-approved infrastructure bonds issued by government-notified financial institutions.

• Lock-in Period: These bonds have a mandatory lock-in period of 5 years​.

• Tax Benefits: Reduces taxable income, lowering tax liability.

• Interest Taxation: Interest earned from these bonds is taxable as per the investor’s income slab.

Eligibility Criteria

• Who Can Claim: Indian residents (Individuals and Hindu Undivided Families) are eligible. 

• Joint Investments: Only the primary holder can claim the deduction for a joint investment.

• Exclusion: 

  • NRIs and other entities like companies or firms cannot claim this benefit.

  • Investments under Section 80CCF cannot be made in the name of minors.

Infrastructure Bonds Overview

Infrastructure bonds are long-term investment options issued by government-approved organizations to raise funds for infrastructure projects. 

Example of Tax Savings Under Section 80CCF

Following is an example of Mr. Dinesh, who earns ₹7 lakh annually, to learn about the tax benefits under Section 80CCF:

Things to Remember

• Only the primary applicant in joint investments can claim deductions.

• Interest is not tax-free.

• Investments exceeding ₹20,000 per year are not eligible for additional tax benefits.

Documents Required to Claim Tax Benefits under Section 80CCF

Following is the list of documents required to claim tax benefits under Section 80CCF:

• PAN Card: Provide a photocopy of your PAN card for identity verification.

• Bank Account Details: Present a cancelled cheque or passbook copy for refund purposes.

• Address Proof: Attach address proof, like an Aadhaar card, voter ID, or utility bill.

Conclusion

Section 80CCF provides tax benefits on investments made in infrastructure bonds. It allows individuals to claim a deduction of up to ₹20,000 for eligible investments. This section encourages investment in infrastructure, contributing to the country's development while helping taxpayers reduce their taxable income.