80CCF Bonds - Tax Savings
What are 80CCF Bonds?
80CCF bonds are long-term infrastructure bonds issued by specified financial institutions and non-banking financial companies (NBFCs). These bonds are eligible for tax deductions under Section 80CCF of the Income Tax Act, 1961, which allows individuals to reduce their taxable income by investing in these bonds.
Benefits of 80CCF Bonds
- Tax Deduction: Investments in 80CCF bonds are eligible for a deduction of up to ₹20,000 from the taxable income in a financial year.
- Long-term Investment: These bonds typically have a lock-in period of 5 to 10 years, promoting long-term savings.
- Fixed Interest Rate: The bonds usually offer a fixed interest rate, providing a predictable return on investment.
Eligibility Criteria
To be eligible for tax benefits under Section 80CCF:
- The investor must be an individual or a Hindu Undivided Family (HUF).
- The investment must be made in specified infrastructure bonds issued by eligible financial institutions.
Important Points to Consider
- The maximum deduction allowed under Section 80CCF is ₹20,000 in a financial year.
- The bonds have a fixed lock-in period, and premature withdrawal is not allowed.
- Interest earned on these bonds is taxable and should be declared in the income tax returns.
Note: During 2013-2014, Section 80CCF was removed but now it's available again for new investments. Investors are advised to check the latest provisions under the Income Tax Act or consult with a tax advisor for current tax-saving options.
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