Tax relief to
investors on capital gains tax bonds will continue in 2008-09. Such bonds are
issued by public sector agencies that are implementing infrastructure projects.
Section 54EC of the Income-Tax Act provides tax exemption to capital gains
arising from the transfer of a long-term capital asset, if such gains are
invested in notified bonds. This will allow, investments in bonds issued by
National Highways Authority of India (NHAI) and the Rural Electrification
Corporation Limited (REC), to avail of capital gains tax waivers. Sources said
tax exemption would be extended, as the NHAI and REC are unlikely to achieve
their targets for the bonds. Both the entities were to raise Rs 6,500 crore in
the current fiscal as per the provisions of the Budget 2007-08. But NHAI could
raise only about Rs 140 crore from the bonds till January end and it expects to
raise a total of Rs 500-600 crore by the end of the fiscal as against bonds
worth Rs 2,000 crore it had issued in October. REC, on its part, plans to raise
Rs 4,500 crore through such bonds this fiscal. While it declined to comment on
the quantum of funds it has raised so far through the issue of these bonds this
fiscal, market analysts said it too is likely to fall short of the target. The
Central Board of Direct Taxes (CBDT) has agreed to extend the scheme into 2008-09
so that both REC and NHAI can raise the remaining funds, sources said. The move
would also be well in place with the government’s focus on increasing
investments in the infrastructure sector, which is estimated to require
investments to the tune of over $ 350 billion during the Eleventh Five-Year
Plan. – www.financialexpress.com