DFI bond subscribers to get tax reimbursement from Centre's Rs 5K cr grant

The government-owned development finance institution (DFI) will not issue tax-free bonds, but subscribers will get reimbursement for the taxes paid from a Rs 5,000-crore grant from the Centre. 

"Instead of allowing the DFI to raise money through tax-saving instruments, the Bill provides that the tax element will get neutralised through this corpus," said a senior finance ministry official. 

The Cabinet on Tuesday approved the Bill to create the government-promoted DFI.  

Explaining the contours, another official said the DFI would compensate for the tax outgo of the institutions putting money in it. "And that’s how they can enjoy the tax benefits