The scheme could offer tax benefits for investments up to Rs 5 lakh and help in partly meeting the country's infrastructure funding needs, which have been pegged as high as $750 billion, sources said.
The scheme could serve multiple purposes, including giving additional tax benefits to the public and channelizing huge amounts of money lying idle in savings accounts or with households for productive means that too without adding to the fiscal deficit, the sources pointed out.
Infra funding need pegged at $750 billion
The new tax saving scheme would partly help country's infrastructure funding needs, which have been pegged as high as $750 billion. The government has already announced a borrowing programme of over Rs 3,00,000 crore for the current fiscal and any further increase could result in liquidity available for the private sector drying up and also add to the ballooning fiscal deficit, they added.
Source: Times Of India New tax-saving scheme to fund infra in Budget?
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By nargis, Section News
Posted on Sun Jun 21, 2009 at 11:38:08 PM EST
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Currently, collective tax benefits are given for an investment of Rs 1 lakh in insurance, pension schemes, bonds, mutual funds, children's education and housing loans, etc. An additional benefit of up to Rs 1.5 lakh is allowed only for housing loan interest payments. According to Planning Commission estimates, the country would need around $500 billion to build infrastructure during the remaining period of the 11th Plan (2007-12).
The country's top private sector bank ICICI Bank's chairman K V Kamath has pegged the capital need for the infrastructure sector even higher, at $750 billion, over the next three years.
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