Question

List any two tax provisions useful for project financing

Answer 1

Deficit financing in advanced countries is used to mean an excess of expenditure over revenue—the gap being covered by borrowing from the public by the sale of bonds and by creating new money. In India, and in other developing countries, the term deficit financing is interpreted in a restricted sense.

Answer 2

The two tax provisions useful for project financing are equity, debt and government grants.

Explanation:

• The finance for projects can come from many sources but it is important that the finance from these sources should have an effect on the total costs, flow of cash and liabilities and the project assets and profits.  

• The government has brought out many forms of grants to minimize the risks of private investors.  

• This is done for achieving the objectives of the economic growth of the country.

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