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27 January 2013 Business Standard The government of India, in a notification issued by the Road Transport and Highways Ministry, has allowed Income tax exemption on 50% of the amount that people/ entities (industry, corporate houses, NGOs and media) contribute for road safety activities. The Finance Ministry has allowed exemption to donors of funds/ institutions carrying out road safety programmes through engineering measures; enforcement, education and emergency care. Once a fund or institution is set up for carrying out such road safety programmes, it can then be registered under Section12AA (charitable or religious trust) and get approval under 80G of the IT Act, which provides for tax exemption of 50% on the amount invested for this purpose. Micro Impact This will encourage more people and companies to contribute funds for road safety activities. The direct involvement of big and reputed corporate houses will urge and influence the public to follow traffic rules, thus, reducing the number of road casualties. More funds will enable such institutions to bring out road safety measures in a more aggressive manner, thus, reducing the number of accidents.
Macro Impact With more contribution from the public and businesses towards the Road Safety programmes, the government can divert their funds from this sector to development of other issues. The country has to bear an economic loss of nearly Rs. 1 Lakh crore yearly due to road accidents, fatalities and injuries. The curb of these expenses will help reduce the government spending and to reduce the fiscal deficit. Currently, there is little research done on making roads safe in India both by the government and by non-profit making institutions. With availability of more money, through investments, extensive research can be carried out for the same.
Micro Impact More individuals will purchase homes, definitely not all segments but on comparison basis there can be a rise in home buying. Local economy will also get a boost. The additional savings can be used for the purposes like investment or even spending on goods and luxury items. This will increase flow of money in the economy. Macro Impact We can see an increase in demand for industry linked to housing like that of Cement, Steel, employment, Paints etc. All those industries linked to housing and not having additional capacities will have to incur capex which in turn giving rise to GDP and growth.