Infrastructure bonds are long-term bonds introduced by the government in 2010 to provide income tax deductions for investments in infrastructure projects. These bonds offer an additional tax deduction of up to Rs. 20,000 for investments, on top of other tax deductions available under Section 80C. The bonds help channel individual investors' savings directly into the infrastructure sector to fund development projects.

2. What are infrastructure bonds?In 2010, the government introduced a new section 80CCF under the Income Tax Act, 1961 ("Income Tax Act") to provide for income tax deductions for subscription to long-term infrastructure bonds and pursuant to that the Central Board of Direct Taxes passed Notification No. 48/2010/F.No.149/84/2010-SO(TPL) dated July 9, 2010. These long term infrastructure bonds offer an additional window of tax deduction of investments up to Rs. 20,000 for the financial year 2010-11. This deduction is over and above the Rs 1 lakh deduction available under sections 80C, 80CCC and 80CCD read with section 80CCE of the Income Tax Act. Infrastructure bonds help in intermediating the retail investor's savings into infrastructure sector directly.

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