How to get more income tax exempt over and above Rs. 1 Lac limit

Introduced in 2010 budget for Financial Year 2020-11, Long Term Infrastructure (Infra) Bonds provide a tool of investment which gives us additional tax deduction on upto Rs. 20,000/- over an above Rs. 1 Lac decution available under under sections 80C, 80CCC and 80CCD. 

Even in budget 2011 this option have been left open for the retail investors to invest savings directly into infrastructure sector and saving up tax upto Rs. 2000/- additionally. Hence this tool is available for the financial year 2011-12 too.

Though the rate of return in this is comparatively lower than many of the investment tools available, it is the window of extra Rs. 20000/- tax deduction which gives it a attraction. As a investment tool alone, it is not as such a great option.

Considering all the pros and cons would be a great idea before investing in the Infra Bonds. You can find this interesting article about Infra bonds which compare the Infra bonds on the parameter of tax saving:

To Conclude:

For investors in tax slab of 1.6 Lax – 5 Lac : One would get better return without investing in Infra bond

For investors in tax slab of above 8 Lax: Its definitely very useful as its most effective in saving tax and getting better return for people in this tax slab.