Portfolio

The infra bond and home-loan routes

PARVATHA VARDHINI C. | Updated on February 12, 2011

A bungalow with Mangalore tiles roof in the city. Photo : Eswarraj   -  The HIndu

A tax-saving option available specifically for this year is the deduction for investment in infrastructure bonds.

Under section 80CCF, the exemption is available for an investment of up to Rs 20,000, over and above the Rs 1 lakh limit.

The DTC, till date, has not stated that this exemption would continue.

However, considering the enormity of funds needed for the infrastructure sector and going by the logic of incentivising long-term savings, this option may continue to be available for the next year, as also under the DTC.

If you are among those whose income falls in the higher tax brackets and need savings beyond Rs 1 lakh to ease your tax burden, you can subscribe to these bonds. A recommendation on three such infrastructure bond issues that are currently open is carried in our ‘Money wise' page today.

Another option under the 80C limit is the deduction for principal repayments on housing loan. You can enjoy the benefit this year; at the same time, gear up for a change. As per the DTC, this avenue will not be available.

What will take its place is a deduction of up to Rs. 1,50,000 on payment of interest on loan taken for self-occupied property.

Here, it is available over and above the Rs 1lakh under Sec 69 and the Rs 50,000 for insurance premia and tuition fees.

However, buyers of second homes should note that if a loan is taken and the property is later let out, the interest deduction will have to be claimed under the ‘house property' head of income.

Published on February 12, 2011

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