The Life Insurance Corporation , or LIC, may not be able to issue tax-saving infrastructure bonds aggregating Rs 5,000 crore to retail investors this fiscal due to a regulatory glitch , which was discovered after India’s largest investment institution was named an issuer of these bonds by the income-tax department.

Also read :  Income Tax rates & Rebates available

Insurance regulations allow life insurers to raise funds only for promoting their core business. So, logically, life insurance companies cannot raise money for any other activity.

This is over and above the Rs1-lakh tax deduction available on other savings schemes such as the public provident fund and equity-linked savings schemes.

According to officials in a couple of merchant banks, quite a few issues need to be clarified by LIC.   Unlike IDFC or IFCI, LIC is not a term-lending institution. Its core mandate is to garner money for life insurance business.

Also read : Save Income Tax with Health Insurance