Have you heard about Section 80ccf of income tax act 1961 to Save Income tax? Do you know How much exemption you'll get under 80ccf of income tax act?
The economic development of a country is closely linked to its infrastructure. Improved infrastructure, Rapid growth, leading to economic progress. However, millions of crores are required for infrastructure development.
While most of the funds come from taxpayers, the co-operation of the citizens of the country is essential to raise the remaining funds.
That is why the government is issuing infrastructure bonds. Section 80CCF (80ccf) of the Income Tax Act provides incentives to attract more investors.
Taxpayers, on the other hand, are also exploring various tax saving schemes on how to reduce their tax burden.
Such people can save tax to some extent by investing in these bonds. In this way both the government and the taxpayer will benefit.
What is section 80ccf of income tax act?
Tax can be saved through 80CCF in addition to the exemption of Rs.x.xx lakhs received under Section 80C. The exemption under this section applies only to taxpayers who have invested in certain schemes. It was drafted in the 2010 budget and came into force in 2011 under the 2011 Income Tax Act. Under this section, investments made in infrastructure and other bonds are tax deductible.
Who is eligible under 80CCF?
This exemption under Section 80CCF is applicable to Indian residents only. This exemption does not apply to NRIs and foreigners. Does not apply to organizations or associations. Individual taxpayers as well as Hindu undivided families are also eligible for tax exemption under Section 80CCF.
Joint Investments under 80CCF
The tax benefits of joint investments are only for one person. The first investor can claim a tax deduction. Also, only one member of a Hindu undivided family can claim an exemption.
What applies 80ccf of income tax act?
Section 80CCF applies only to investments made in tax saving bonds and infrastructure bonds issued by banks and corporations with government approval.
What is the maximum benefit 80ccf of income tax act?
Under the section of 80C exemption is allowed upto a maximum limit of Rs. 20,000 and can be availed under Section 80 CCF. Investments made beyond this will not be exempt.
How does it work section section 80ccf of income tax act?
For example, Siddarth Jain is 28 years old. The annual salary is Rs.5.60 lakhs. According to the income tax rules, tax is payable on income in excess of Rs 2.50 lakh.
For example, Siddarth Jain has to pay tax for Rs 3 lakh. He has invested Rs. 1.50 lakhs in various schemes which provide exemption under Section 80C to reduce the tax burden. Further taxable income is Rs.1.50 lakhs (Rs.3 lakhs - Rs.1.50 lakhs).
He invested Rs 40,000 in infrastructure bonds offered by a leading bank to get more tax exemption. He can now claim the exemption under Section 80CCF.
Although he has invested Rs 40,000 in these bonds, he can only get an exemption of up to Rs 20,000. That means Siddarth Jain still has to pay tax on Rs 1.30 lakh (Rs 1.50 lakh - Rs 20,000).
Documents required to get exemption under 80ccf of income tax act
- PAN details
- Government approved ID proof
- Bank Details (if required)
- Investment papers applicable to Section 80 CCF of the Income Tax Act
Important Note: Interest income on tax savings bonds is tax deductible. So interest is taxable on income. These types of bonds come with long-term limits. The term limit is over 5 years. Lock-in is usually up to 5 years. It can only be sold once it is complete. Even if you invest in separate bonds, you can only claim up to Rs 20,000 per annum on all bonds. This does not apply to investments in the name of minors.
