Section-80CCF and Section 80CCG

Section 80CCF of the Income Tax Act is a special provision introduced for benefiting the investors of certain government-approved bonds schemes. The section was discontinued w.e.f AY 2013-2014. Section 80CCF was formulated in the year 2010 and came in force in 2011 under the income tax act.The deduction is avaliable to Indian resident,Individuals, HUFs and Minors also shall be take the benefit for this deduction. The minimum investment must be Rs 5,000. The is no higher cap limit, however the deduction limits to Rs 20000. The bonds must have a 5 year lock-in period. Sometimes companies offer buyback options wherein the investor can surrender the bonds after 5 years without up giving up his interest income. These bonds are listed on the stock exchange

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      These bonds are issued by infrastructure companies seeking approval of the government, and they offer a decent rate of interest plus additional tax benefits.Corporations like the Life Insurance Corporation, Integrated Infrastructure Finance Company, Industrial Financial Corporation of India, and non-banking financial institutions which are approved by the government as infrastructure companies.The benefits of Section 80CCF are over and above that of Section 80C.

Investors should remember that Section 80CCF applies only to certain investments.

Let us consider an example for better understanding

Mr Sunil, aged 30, works in a company, has earned a salary of Rs 7.5 lakhs this year. As per the income tax slabs, he is liable to pay tax on the amount exceeding Rs 2.5 lakhs, i.e. on Rs 4 lakhs. In order to reduce his tax liability, he invests Rs 100000 in schemes eligible for the deduction of section 80C. The limit of section 80C is Rs 1.5 lakh

Thus, now his taxable income at Rs 4 lakhs minus Rs 1 lakh = Rs 3 lakhs

Further, he also invests in government approved infrastructure bonds worth Rs 30,000.

Such bonds being eligible for deduction u/s 80CCF reduces his taxable income to Rs 3 lakhs minus Rs 20,000 = Rs 2.8 lakhs as the deduction u/s 80CCF is up to Rs 20,000.

Thus, we can see that Mr sunil has reduced his tax liability considerably.

Section 80CCG

Deduction under section 80CCG has been discontinued starting from 1st April 2017.

The Rajiv Gandhi Equity Savings Scheme was introduced in Budget 2012. This deduction was over and above the 80C deduction available to individuals

THEREFORE, the conditions under section 80 CCG for claiming deduction would be :–

  The gross total income of the assessee for the relevant assessment year should be less than or equal to ₹ 12 lakhs.

  The assessee should be a new retail investor as per the requirement specified under the notified scheme.

The investment should be in such listed equity shares or listed units of equity-oriented fund specified under the notified scheme.

The minimum lock in period in respect of such investment should be three years from the date of acquisition 

 Tax Benefit

The deduction was 50 % of amount invested in such equity shares or ₹ 25,000, whichever is lower. The maximum Investment permissible for claiming deduction under RGESS is Rs. 50,000. The benefit is in addition to deduction available u/s Sec 80C

Mr A, new retail investor, have made the following investment in equity share/units of equity oriented fund of Rajiv Gandhi Equity Savings Scheme for the Previous year 2012-13,2014-15 and 2015-16 as below :

Particulars	P.Y 2013-14	P.Y 2014-15	P.Y 2015-16
Investment in listed equity shares	₹ 15,000	₹ 42,000	₹ 30,000
Investment in units of equity oriented fund	₹ 45,000		₹ 12,000
Sale of all units of equity oriented fund purchased in P.Y 2013-14		₹60,000
Gross Total Income (comprising of salary income and bank interest)	₹11,50,000	₹11,75,000	₹12,25,000
Deduction under section 80 CCG	₹ 25,000	₹21,000	Nil
Remark	(Restricted to 50 % of ₹ 50,000)	(Restricted to 50 % of ₹42,000)	(Not eligible since GTI exceeding   ₹12,00,000
Amount liable to tax (on account of violation of condition)		₹ 22,500

Note :-  Since the deduction under section 80 CCG was not allowed during the P.Y 2015-16 on account of the Gross Total Income exceeding ₹ 12 lakhs, no amount relating to that year can be subject to tax in the P.Y.2012-15, being the year of violation of condition, even though the units were sold within 3 years. However a deduction of ₹ 22,500 (50 % of ₹45,000) was allowed under section 80 CCG in respect of investment of ₹15,000 in units of equity oriented fund in the P.Y,2013-14. Since such units have been sold in the P.Y. 2014 -15, the condition under section 80 CCG has been violated and ₹ 22,500 would be subject to tax in the P.Y.2014-15.