Union Budget 201-13: No rebate on investment in Infra Bonds

Taxpayers may have got some relief through the increase in the basic exemption limit and widening of the 20% tax slab, but the central government has taken away a crucial tax saving option.

Rs. 20,000 rebate

The budget for 2012-13 has not extended the Rs. 20,000 rebate (Section 80 CCF) available for investments in infrastructure bonds this year, which was over and above the Rs. 1 lakh maximum rebate available under Section 80C. Infrastructure bonds allowed taxpayers in the highest 30% slab to save a maximum of Rs 6,180 in tax.

The incentive was introduced in the budget for 2010-11 to make long-term funds available to infrastructure sector. It was extended for one more year in 2011-12.

The mobilization through these funds has not been as high as anticipated because of the low investor appetite.
The reason for discontinuing the tax sop was poor investor response. The total amount raised through these tax-saving bonds is only Rs. 3,066 crore in 2010-11 and is pegged at somewhat higher in the current fiscal.

Now, the government has increased the limit for tax-free infrastructure bonds from Rs. 30,000 crore to Rs. 60,000 crore. Investment in these bonds does not fetch an investor tax rebate, but the interest income earned on them is tax free.

Src: ET Bureau

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