New Delhi: The Government is planning to double the amount of yearly tax rebate, next year. It seems now the best way of getting twice the amount of tax savings is to invest in infrastructure.

With the amount of tax returns increasing every year, the Government is planning to channel the money for the development of the country's infrastructure.

According to information available with Network18, Finance Ministry has been discussing over a proposal to double to amount of yearly income tax rebate from existing Rs 1 lakh at present to Rs 2 lakh per annum.

While existing rebate of Rs 1 lakh on investments like NSC, equity link tax saving scheme, LIC and long term Fixed Deposits is there to stay.

The additional rebate of Rs 1 lakh per annum will be provided on investments in infrastructure projects from REC, NHAI, and Bonds floated by Airport Authority of India and according to the experts this may turn out be the most effective way to attract much needed investment in infrastructure projects.

Tax expert Satinder Jain says, "If tax reductions are increased people will definitely invest."

Even though tax rebate for investments up to Rs 1 lakh in the infrastructure bonds are available at the moment as well, but according to finance ministry officials, a special rebate for investments in infrastructure projects will provide Government with the much-needed financial support.

According to the 11th five-year plan, Rs 3.2 lakh crore are required for the infrastructure projects in the country.

Even a 10 per cent investment through tax saving instruments will be a great relief for the Government.

With this in mind, the Government is planning to double to amount of tax rebate and financial year 2008-09 may just turn out to an year of greater saving.