In a bid to give a further boost to infrastructure financing, the Finance Ministry has now allowed India Infrastructure Finance Company Ltd (IIFCL) to receive certain interest payments without them being subjected to tax deduction at source (TDS).
The TDS exemption would be available only on interest payments other than interest on securities. It would basically be available on IIFCLs loans and inter-corporate deposits, a Finance Ministry official said.
IIFCL need not also go through the procedure of claiming refunds, if any, from the tax department for the TDS deducted on the interest payments made to them for loans extended to viable infrastructure projects. This will give a boost to infrastructure financing, sources added.
It was pointed out that the main objective behind the setting up of IIFCL was development of infrastructure facilities in India and not earning profit and distributing dividends.
IIFCL is a government-owned company and was established in January 2006 with the objective of providing long-term finance to viable infrastructure projects. Besides providing long-term debt to various infrastructure projects, IIFCL also provides refinance to banks and other financial institutions for their loans to infrastructure projects.
Till mid-October this year, IIFCL had sanctioned financial assistance of Rs 14,966 crore towards 64 infrastructure projects involving total project cost of Rs 1,11,586 crore. The actual disbursement till then was about Rs 700 crore towards 34 projects.