Budget 2021: Tax saving infra bonds to provide savings options for salaried class may make comeback

The government may consider the reintroduction of infrastructure bonds which will be offering tax breaks to individual taxpayers over and above the levels available under current income tax legislation.

The news agency IANS reported that the finance ministry has received several proposals for re-introduction of infrastructure proposals in the Budget 2021 to provide an additional avenue of savings for the salaried class. It will help the government to mobilise additional funds to channelise public savings into huge infrastructure development investment.

The sources said that the proposal is being actively considered and may form part of Budget proposals if it gets unanimous approval from the finance ministry. 

If the proposal is accepted in the form applicable in FY12, salaried would get additional savings avenue of Rs 20,000 of their taxable income as per earlier introduced Section CCF.

To make the investments in infrastructure bonds attractive for Rs 20,000 tax break or more may be allowed over and above Rs 1.5 lakh deduction available to salaried under section 80C of the Income Tax Act for the investment made in specified instruments.

A salaried person can have up to Rs 1.5 lakh for making an investment under Section 80C, additional Rs 50,000 deduction is available for contributions made in a year towards National Pension Scheme (NPS) besides, 80D deduction available for paying a premium on health insurance policies for self and dependents.