Investment in Infrastructure Bonds Exempted from Tax

Under a new section- Section 80CCF of the Income Tax Act, 1961, the Indian government notified on 10 July 2010 that investment in infrastructure bonds would be applicable for tax exemptions. The exemption in these long-term infrastructure bonds under the new section would be in addition to the deduction of Rs 1 lakh already allowed under Sections 80C, 80CCC and 80CCD of the Act. An investment up to a maximum of Rs 20000 in infrastructure bonds issued by the Industrial Finance Corporation of India, Life Insurance Corporation of India, and Infrastructure Development Finance Company would be deductible from taxable income. The Indian government also for the first time allowed Non-Banking Finance Companies classified as an infrastructure finance company by the RBI to issue infrastructure bonds which would have a minimum of 10 years maturity period and a lock-in period of five years for the investor.