The uncertainty regarding tax benefits under section 10(23G) on infrastructure lending has put banks and financial institutions in a quandary. While the original provision under the income tax rules said that interest income on these lendings will be free of income tax, the circular issued recently said only the net interest income will be free of tax. Institutional lenders have asked for a clarification on the exact interpretation of the wording. In the meanwhile, market sources have interpreted the clause to mean that lenders will not be allowed full tax deduction on interest they receive from the infrastructure promoters. The attraction of section 10(23G), thus, gets heavily reduced as it will now only mean marginal benefits to lenders. Some investors are now building a clause in the agreements that if the income tax authorities do not allow the full deduction, borrowers have to pay higher rate of interest. Borrowers are naturally far from happy with this clause as it means a large degree of uncertainty for their projects.