Indian government debates change to securities tax to fund infrastructure projects Indian government debates change to securities tax to fund infrastructure projects

Indian government debates change to securities tax to fund infrastructure projects
30 Jan 2018

The Indian government is considering whether to offer higher income tax deductions on investments made by taxpayers in securities used to raise funds for government infrastructure projects.

The current limit for such investments is Rs2 lakh (US$3,144), but the threshold could be raised to at least Rs2.5 lakh (US$3,930), according to LiveMint. The change will only be available for investments made in government infrastructure projects and there is likely to be a lock-in period. This higher tax benefit would affect around 7.5 million taxpayers.

Taxpayers currently receive relief for investments made in provident funds, public provident funds and life insurance premiums as well as payments made toward the tuition fees of their children and home loans. An additional deduction of up to Rs50,000 (US$786) is also made for investment in the National Pension System (NPS).

In the 2017 budget, the government provided relief to taxpayers with annual incomes of between Rs2.5 lakh (US$3,930) and Rs5 lakh (US$7,860), reducing the rate from 10% to 5%.

The government is also working on making it easier for angel investors to put money into start-ups. Angel investors typically invest in seed capital for start-ups, with income tax payable if the valuation of the company’s shares exceeds the fair market valuation. While only venture capitalists are currently exempt from this provision, KPMG is calling for it to be extended across the board.

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

The Indian government is considering whether to offer higher income tax deductions on investments made by taxpayers in securities used to raise funds for government infrastructure projects.

The current limit for such investments is Rs2 lakh (US$3,144), but the threshold could be raised to at least Rs2.5 lakh (US$3,930), according to LiveMint. The change will only be available for investments made in government infrastructure projects and there is likely to be a lock-in period. This higher tax benefit would affect around 7.5 million taxpayers.

Taxpayers currently receive relief for investments made in provident funds, public provident funds and life insurance premiums as well as payments made toward the tuition fees of their children and home loans. An additional deduction of up to Rs50,000 (US$786) is also made for investment in the National Pension System (NPS).

In the 2017 budget, the government provided relief to taxpayers with annual incomes of between Rs2.5 lakh (US$3,930) and Rs5 lakh (US$7,860), reducing the rate from 10% to 5%.

The government is also working on making it easier for angel investors to put money into start-ups. Angel investors typically invest in seed capital for start-ups, with income tax payable if the valuation of the company’s shares exceeds the fair market valuation. While only venture capitalists are currently exempt from this provision, KPMG is calling for it to be extended across the board.

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

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