The government allowed Life Insurance Corporation of India (LIC) and a few other finance companies to issue tax-free infrastructure bonds. An investment up to Rs 20,000 in these bonds will qualify for income tax deduction.
The government has termed the bonds issued by these lenders as ‘long-term infrastructure bonds’, which will get deduction under Section 80CCF of the Income Tax Act. The tenure will be a minimum of 10 years, with a lock-in of five years for investors.
Investment up to Rs 20,000 in these bonds will be eligible for deduction from the total income of the assessee. The deduction will be in addition to the deduction of Rs 1,00,000 allowed under sections 80C, 80CCC and 80CCD of the Act,” the finance ministry said in a press statement. It will be mandatory for the subscriber to give his permanent account number to the issuer.