Section 80 is tax-free

"As per the present provisions, there is no tax on withdrawals under Section 80C in the next financial year. The government is yet to finalise its view on the EET (exempt at contribution, accumulation and tax at withdrawal) method.

If a view is taken it will not apply retrospectively," Arvind Modi, joint secretary, Central Board of Direct Taxes, told reporters here.

Modi said the new section would include repayment of the principal amount in case of housing loan, tution fees for two children and other existing schemes.

Finance minister P Chidambaram had announced the establishment of a committee to examine the use of EET metod of taxation in the future.

Revenue Secretary K M Chandrashekar said that the Rs 6,000 crore increase in direct taxes projected by the Finance Minister in his budget speech was reflective of the buoyancy in personal income tax and corporation tax.

Chandrashekar said that the intention of introducing zero coupon bonds for public sector enterprises, infrastructure capital funds and infrastructure capital company was to popularise the concept. "The tax if on accrual basis is 30 per cent, if it is long term capital gains with indexation the rate is 20 per cent and without indexation the tax rate is 10 per cent," he said.