The finance ministry is considering giving relief to taxpayers in the form of higher income tax deduction, said two government officials familiar with the developments.

The current relief is Rs 2 lakh and discussions are on to increase it to at least Rs 2.5 lakh. The extra deduction, however, will be available only on investments made by taxpayers in government infrastructure projects, the officials said.

Discussions are on to give relief to taxpayers in the form of higher tax deduction. The higher deduction will be for investing in infrastructure projects in the form of bonds or through equity-linked savings schemes, said a government official, who asked not to be named. These investment routes are likely to have a lock-in period, he added.

At present, taxpayers get relief under 80C, 80CC and 80 CCD of the Income Tax Act. The deduction is offered for investments made in provident fund, public provident fund, and life insurance premiums.

In 2017, the government had provided relief to taxpayers with annual income between Rs 2.5 lakh and Rs 5 lakh by reducing the rate from 10 per cent to 5 per cent.(Agencies)