Infra bond tax gain may stay

The finance ministry may extend tax benefits for investment in infrastructure bonds for one more year. But the limit ofRs 20,000 may not change, despite appeals from the industry. This would mean a tax saving ofRs 2,000 toRs 6,200 for an individual, depending on the tax slab. A finance ministry official said the revenue department was considering allowing income-tax deduction on investments up toRs 20,000 in infrastructure bonds in Budget 2013 as well. The ministry may also consider allowing some more entities to issues such bonds, but it is not in a position to raise the cap, given its tight fiscal situation and bleak revenue prospects. The government is struggling to meet its tax and non-tax revenue targets. Net direct tax collections in the first nine months of the year (April-December 2011) stood atRs 3,23,955 crore, which is just 61 per cent of the Budget Estimate ofRs 5,32,651 crore for 2011-12. This leaves the revenue department with the Herculean task of collectingRs 2,08,696 crore in the remaining three months.

Source: Business Standard