Further to the insertion of Section 80 CCF in the Income Tax Act, 1961 by Finance Act, 2010, the central government vide its notification[1] dated July 9, 2010 (“Notification”) has specified characteristics of the long term infrastructure.
It may be noted that earlier this year vide Finance Act, 2010, Section 80 CCF was inserted in the Income Tax Act, 1961, which provides that the amount paid by the assessee towards subscription of the long term infrastructure bond (as specified by the central government) shall be deducted from the total income of the assessee. Section 80 CCF provides as follows:
“In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted, the whole of the amount, to the extent such amount does not exceed twenty thousand rupees, paid or deposited, during the previous year relevant to the assessment year beginning on the 1st day of April, 2011, as subscription to long-term infrastructure bonds as may, for the purposes of this section, be notified by the Central Government.”
The conditions required to be fulfilled, in order to categorize a bond as a long term infrastructure bond (“Bond”) for the purposes of Section 80CCF of the Income Tax Act are, inter alia, as follows:
1. The name of the Bond should be “Long-term Infrastructure Bond”.
2. Such Bonds should have been issued by either of the Industrial Finance Corporation of India, Life Insurance Corporation of India, Infrastructure Development Finance Company Limited or a non-banking finance company classified as an Infrastructure Finance Company by the Reserve Bank of India.
3. The Bonds shall be issued for a limited period of the financial year 2010-11 and volumes of such issuance of Bonds shall not exceed twenty five percent of the incremental infrastructure investments made by the issuer during the financial year 2009-10.
4. Bonds shall have the minimum validity period of 10 years, further there shall be a minimum lock-in period of five years for the investor. After expiry of such lock-in period, the investor can sell the Bonds either through the secondary market or through a buyback facility, as may be specified by the issuer in the offer document. Further after the expiry of the lock-in period, the investor can pledge / lien / hypothecate Bonds for obtaining loans from scheduled commercial banks.
5. The yield of the bond will not be exceeding the yield on government securities of corresponding residual maturity, as reported by the Fixed Income Money Market and Derivatives Association of India, as on the last working day of the month immediately preceding the month of the issue of the bond.
No comments:
Post a Comment