Is there an investment opportunity in PSP Projects shares?
Is this the right time to invest in the shares of PSP Projects, a company that does construction work for the government and corporate India? How much benefit will there be from investing in this stock? What targets are experts giving regarding this stock? Watch this video to know-
The Reserve Bank of India’s (RBI) Retail Direct Scheme has a distinct disadvantage when it comes to tax incentives. Liquidity in the secondary market is also not encouraging, the Mint has reported.
The report notes that while interest earned on bonds is taxable at slab rate, in the same bonds bought via MF route the interest accrues in the mutual funds and not taxed till the investor redeems the units. A 20% capital gains tax is applied if the bond is held for more than three years but investors can claim indexation benefits.
The report further notes that there are target maturity funds, launched by fund houses. Target maturity funds buy and hold bonds till the target maturity date. Even if investors exit before the target date, better maturity than in the secondary market is available for selling bonds in small quantities. The expense ratio that it attracts is also low.
SGBs not subject to capital gains
The report further quotes Suresh Sadgagopan, founder, Ladder7 Financial Advisories, as saying that liquidity is an important advantage with debt mutual funds, besides the tax advantage. There is also a convenience standpoint. It is also good to have all investments in one place, he added.
Sovereign gold bonds (SGBs), available on RBI Retail Direct Scheme, are not subject to any capital gains taxes or other income taxes if held to maturity. SGBs have a tenor of eight years.
Experts have also said that tax incentives can allure investors to the Retail Direct Scheme of the RBI. Global fintech companies could also be attracted with such incentives.
In India, retail investors do not see bonds as alluring as equities. Small savings schemes and debt mutual funds are more popular as they offer better returns.
A report in the Economic Times, quoting data from Valueresearch Online, said Sukanya Samriddhi Yojana accounts earn 7.6% while the debt GILT funds offer on average 8.77% through a 10-year period, whereas benchmark bonds yield is 6.36%.