* Tax revenue fall, new package to boost bond issuance by Y20 trln * Total JGB issuance for FY2020/21 to exceed record Y270 trln * Govt will limit hike in bond issuance to financial institutions (Adds details of bond issuance plan, background on budget, stimulus and economy) TOKYO, Dec 10 (Reuters) - Japan is likely to sell over $1 trillion of new government bonds this fiscal year to fund its huge stimulus packages, sources said, as the coronavirus crisis guts tax revenues and strains already tattered finances. Prime Minister Yoshihide Suga on Tuesday announced a third spending package to speed up the recovery from recession, bringing the combined value of pandemic-related stimulus to $3 trillion - two-thirds the size of Japan’s gross domestic product. The additional cost from the third package will likely boost new debt issuance for the year ending in March 2021 to over 110 trillion yen ($1 trillion) from the current plan of roughly 90 trillion yen, three government sources told Reuters on Thursday. When including refinancing bonds to roll over past debt, total issuance of Japanese government bonds (JGB) will exceed a record 270 trillion yen in the current year, the sources said. But the government will try to minimise any increase in bonds sold to financial institutions via regular auctions from the current 212 trillion yen, mainly by tapping funds reserved from past bond issuance, they said. Even if the government were to raise the amount sold to financial institutions, it will do so mostly for short-term bills to avoid big increases in issuance of JGBs, they said. The government will announce the revised bond issuance plan for the current fiscal year on Tuesday, when it finalised its third extra budget. Japan’s bond issuance plan for next fiscal year will be decided separately on Dec. 21, the sources said. The world’s third-largest economy rebounded in July-September from its worst postwar contraction in the second quarter, though many analysts expect a third wave of COVID-19 infections to keep any recovery modest. Japan’s public debt burden, at twice the size of its economy, is the biggest among advanced nations due to years of heavy stimulus and the ballooning social welfare costs of a rapidly ageing population.