NHAI turns to tax-free bonds to raise Rs 28k cr in FY16

Ministry of Finance and the Department of Economic Affairs have conveyed their in-principle approval for the same, says Minister of State for Road Transport and Highways

The National Highways Authority of India (NHAI) will raise Rs 28,000 crore in the current fiscal by issuing tax-free bonds.

"The government has allowed NHAI to issue tax-free infrastructure bonds aggregating Rs 24,000 crore and capital gain tax exemption bonds aggregating Rs 4,000 crore in the financial year 2015-16," Minister of State for Road Transport and Highways Pon Radhakrishnan informed the Lok Sabha in a written reply today.

He said the Ministry of Finance and the Department of Economic Affairs have conveyed their in-principle approval for the same.

However, no such concurrence is required for the issue of capital gain tax exemption bonds.

"Tax-free infrastructure bonds to be issued by NHAI are likely to have benefits under Section 10(15)(IV)(h) of the Income Tax Act, 1961," Radhakrishnan said.

The government is pushing ahead with plans to raise funds for roads, railways and irrigation through the tax-free infrastructure bond route.

Finance Minister Arun Jaitley, in his Budget speech had said: "I intend to permit tax-free infrastructure bonds for the projects in the rail, road and irrigation sectors."

The government will establish a National Investment and Infrastructure Fund (NIIF) and ensure an annual flow of Rs 20,000 crore into it, he had said.

Jaitley had also earmarked investments to the tune of Rs 70,000 crore in the infrastructure space.

The Budget had increased outlays on roads and the gross budgetary support to the Railways, by Rs 14,031 crore and Rs 10,050 crore, respectively.