From Deduction to Exemption

Spending too much time worrying about the scrapped tax deduction is not worth it.  On the contrary, we should think about the exemption you can gain through the tax-free infrastructure bonds. Contrasting to the tax-saving bonds under Section 80CCF, these bonds will not cut your tax outgo. Nevertheless, the interest they earn will be tax-free. The interest earned on Section 80CCF bonds is fully taxable, which decrease the post-tax yield for investors. Besides, the tax has to be paid every year, not on the maturity of the bond.

Alternatively, the income from tax-free infrastructure bonds is completely exempted. What's more, unlike the 20, 000 ceiling in the tax-saving bonds, there is no limit to the amount that a retail investor can park in these bonds. Kamal Rampuria, Senior Vice-President, AUM Capital Market  said, "While the tax-saving bonds under Section 80CCF gave better returns, even tax-free infrastructure bonds are a good option for investors in the highest income bracket.”