Section 80CCF Income Tax Act, 1961

New Section Introduced in Income Tax Act 2011

Section 80CCF was introduced in the Income Tax Act, 1961 in the budget of February 2010. As per this section investments made in notified infrastructure bonds are exempt from tax up to maximum of Rs 20,000 per year. Section 80CCF allows individuals to invest Rs. 20,000 in infrastructure bonds, and reduce this amount from taxable income. This exemption is in addition to the Rs. 100,000 deduction under section 80C (Investment in instruments like ELSS Mutual Funds, Life Insurance, Provident Fund etc).

Tax Saving Infrastructure Bonds Not a New Concept

Tax saving infrastructure bonds are not a new concept. They existed till the year 2005 when the section 88 of income tax act was in force. In the last budget infra bonds were reintroduced under section 80CCF.

Interest Income is Taxable

The interest income from infrastructure bond is taxable. The interest will be added to investors taxable income. This means even though the investment in these bonds is exempt from tax (maximum Rs 20,000). interest income is not. This means investment under section 80CCF is advisable only after the investor has completely exhausted Rs One Lakh investment under section 80C.

Reduction in Minimum Lock In Period : Tax Saving Infrastructure Bonds

The minimum lock in period for Tax Saving Infrastructure Bonds which is 5 years as of now, irrespective of which financial institution is offering these bonds. The government of India (Finance Ministry) is giving a thought to reduce this minimum lock in period further, which they feel will help in attracting Foreign Institutional Investors (FIIs) helping Indian Infrastructure development. Government of India plans investments of USD 1 Trillion in the infrastructure segment over the next 5 years.

Disadvantages of Infrastructure Bonds

Infrastructure Bonds do not offer any protection against high inflation since the rate of interest they offer is pre-determined. Against the pledging of the infrastructure Bonds with a bank, one can borrow money from banks. The amount depends on the market value of the bond and the credit quality of the instrument.

Moreover, it should be noted that although Infrastructure Bonds are considered to be safe, there is no assurance of getting the full investment back. Long Lock In period Lack of liquidity though they are listed on BSE and NSE Investor at low end of tax bracket may not benefit much

What is Tax Saving Infrastructure Bond?

These bonds are options given to infrastructure finance companies (IFCs) to support their lending to avoid dependence on banks. IFCs are not supposed to take deposits from retail customers. The bonds would be issued in the dematerialised format and investors can even buy it in physical format if they don't have a PAN card or demat account. The bonds will be listed on the Bombay Stock Exchange (BSE) and investors can exit the bonds in the secondary market after the completion of the lock-in period. These Bonds are Tax Saving Infrastructure Bonds. By making investment of Rs 20,000 in Infrastructure Bonds, you can avail tax exception under Section 80CCF. Section 80CCF is in addition to Investment of Rs 1, 00, 000 that you can make under Section 80C and Rs 20,000 under Section 80D and Section 80E for Education loans of the Income Tax Act.

Documents Required:
1) Filled Up Application 2) Copy of the PAN card (Self-attested) 3) A Cheque in favour of the 4) KYC Documents: Self-attested copies of the following documents are required to be submitted by the Applicants as KYC Documents: a. Proof of identification for individuals: Any of the following documents are accepted as proof for individuals: Passport Voters ID Driving Licence

Government ID Card Defence ID Card Photo PAN Card Photo Ration Card.

b. Proof of residential address: Any of the following documents are accepted as proof of residential address: Passport Voters ID Driving Licence Ration Card Society Outgoing Bill Life Insurance Policy Electricity Bill Telephone Bill (Land/Mobile).

Procedure:
1) 2) 3) Print the application form, print and Fill it up Attach the required Documents Submit the form in a collection canter near you

section 80D
Section 80D Eligible Assesses Individuals and Hindu Un-divided Family (HUF) only Scope Health Insurance Premium paid under a scheme framed by any other insurer and approved by the Insurance Regulatory & Development Authority (IRDA).

Mode of Payment The premium may be paid by any mode of payment other than cash. Deduction under Section 80 D of the Income Tax Act, 1961 For senior citizens i.e an individual resident who is of the age of 65 years or more at any time during the relevant previous year: The amount of heath insurance premium paid or Rs. 20,000, whichever is less. For non-senior citizens: The amount of health insurance premium paid or Rs. 15,000, whichever is less.

Who can be covered

For an individual: Premium paid for insuring the health of the individual, his or her spouse, parents and children. For a HUF: Premium paid for insuring the health of any member of the family.

Let us now understand the computation of the deduction with the help of a simple example # : An individual assesses pays (through any mode other than cash) during the previous year health insurance premium as under:

1. Rs. 12,000 to keep in force an insurance policy on his health and on the health of his wife and 2.
children Rs. 17,000 to keep in force an insurance policy on the health of his parents.

Under the proposed new provisions, he will be allowed a deduction of Rs. 27,000 (Rs. 12,000+ Rs. 15,000) if neither of his parents is a senior citizen. However, if any of his parents is a senior citizen, he will be allowed a deduction of Rs. 29,000 (Rs. 12,000 + Rs. 17,000).

Tax Deductions under Section 80E for Education Loans

Education loans are a convenient and popular option for many, to meet the cost of higher education. Did you also know that under Section 80E of the Income Tax Act, repayment of this education loan could be used to claim a deduction? Read on to find out, what this section offers and how to utilize it to your benefit.

Deduction in Respect to Repayment of Education Loan If you have taken an education loan from any financial institution or an approved charitable institution, Section 80E provides a tax deduction on the loan interest that you are paying.

Who is Eligible? Individual assesses only. So, if you are part of an HUF, this deduction cannot be claimed by you.

Deduction Limit The entire interest paid on the education loan could be used to claim a deduction. There is no cap on the deduction amount. However, one needs to remember, that there is no tax benefit on the principal repayment of the loan.

Scope of Deduction

The loan should be taken for the sole purpose of higher education. It could either be for the individual, spouse or children. Loans for the higher education of siblings, in-laws, nephew or niece, will not qualify for any deduction. Also, from assessment year 2010-11, deduction could be claimed for the student for whom the individual or assessee is the legal guardian. The education loan should be taken from either a financial institution or an approved charitable trust. Loans taken from friends, employer or relatives do not qualify for a deduction.

Courses Eligible for Deduction From assessment year 2010-11, the government has extended the benefit in Section 80E to all streams of studies including regular courses as well as vocational courses, pursued after passing the Senior Secondary Examination from a recognized Board.

Education Loans taken for full time courses only are eligible. Any graduate course (as mentioned above), or, postgraduate courses in engineering, medicine, management, applied sciences, mathematics or statistics are considered for a deduction. No deduction is available for part-time courses.

Deduction Period The deduction is available for a total of eight years or till the principal and interest amount have been repaid, whichever comes earlier. This eight years would include the year in which the loan repayment starts and seven years following this year. So even if your loan tenure exceeds these eight years, no deductions can be claimed beyond this.

Key Factors to Keep in Mind a) Loan should be in the name of individual claiming deduction. No deduction can be claimed for loans in the name of parents, spouse or sibling; even if the loan was taken for your studies. b) The course need not be pursued in India. Loans for overseas courses are also permissible for a deduction. c) Deduction would be applicable only when the individual starts repaying the loan.

A final word The benefit under section 80E is over and above the tax benefits under section 80C. So if you have utilized your limit under section 80C, this could be a further opportunity to reduce your tax outgo.