Government has permitted National Bank for Agriculture and Rural Development (NABARD) to raise Rs 5,000 crore through tax saving NABARD rural bonds for funding rural road projects.

Coming into effect from April 1, Finance Ministry said deposits made in the rural bonds would be eligible for deduction under section 80C of the Income-Tax Act for assessment year 2008-09 and subsequent years.
Also tax payers get income tax exemption on investment upto Rs 1 lakh in schemes like insurance, provident funds and PPF. From the year, 2007-08 investment in a term deposit for a fixed period of 5 years with any scheduled bank is also eligible for deduction.