Private FIs allowed to issue tax-free core sector bonds
This is the news which was shown on 24th march 2010 regarding the issue of infrastructural bonds.
Indian private banks and non banking finance companies join state owned firms and hence will be allowed to offer tax free infrastructure bonds to investors.
Infrastructure bonds were available through public sector financial institutions like ICICI and IDBI, in the name of safety bonds and IDBI flexi bonds. They are used as tax saving tools by investors. The government aims to raise long term funds through infrastructure bonds. The country requires a trillion dollars over the 12th plan period (2012 - 2017) to improve its infrastructure. Bearing this point in mind, the government has decided to issue tax free infrastructure bonds.
In the early half of the decade, infrastructure bonds were very popular with investors but the changes in 2005-2006 budget made them less attractive and practically killed the retail market for such bonds which was worth Rs.15000 to 20000 crores.
Effective yield on the infrastructure bonds comes out to be quite good. In case an investor invests Rs 20000 in these bonds, you can claim a deduction of Rs. 20000 in addition to the sec.8O.C deduction. Applying the highest rate of tax of 30% this translates into a ceiling of 6000 in taxes. In this way retailer can reduce the tax liability.
The government allowed a deduction of Rs 20000 on investment in long term infrastructure bonds. This deduction is an addition to 1 lakh under Sec.80 c of Income Tax Act.
Indian private banks and non banking finance companies join state owned firms and hence will be allowed to offer tax free infrastructure bonds to investors.
Infrastructure bonds were available through public sector financial institutions like ICICI and IDBI, in the name of safety bonds and IDBI flexi bonds. They are used as tax saving tools by investors. The government aims to raise long term funds through infrastructure bonds. The country requires a trillion dollars over the 12th plan period (2012 - 2017) to improve its infrastructure. Bearing this point in mind, the government has decided to issue tax free infrastructure bonds.
In the early half of the decade, infrastructure bonds were very popular with investors but the changes in 2005-2006 budget made them less attractive and practically killed the retail market for such bonds which was worth Rs.15000 to 20000 crores.
Effective yield on the infrastructure bonds comes out to be quite good. In case an investor invests Rs 20000 in these bonds, you can claim a deduction of Rs. 20000 in addition to the sec.8O.C deduction. Applying the highest rate of tax of 30% this translates into a ceiling of 6000 in taxes. In this way retailer can reduce the tax liability.
The government allowed a deduction of Rs 20000 on investment in long term infrastructure bonds. This deduction is an addition to 1 lakh under Sec.80 c of Income Tax Act.
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