Direct listing abroad by domestic companies can expect exemption from capital gains tax as the finance ministry is in talks with the ministry of corporate affairs ministry and the Reserve Bank of India (RBI) in this regard, according to a newspaper report.
Settlement of bonds that are part of global indices via Euroclear can also expect the tax benefits, the Times of India has reported.
The move to include Indian bonds in global indices have raised concern among certain quarters though the RBI has been in favour of this move, says the report.
Quoting the sources, the newspaper said the finance ministry has asked RBI to study all the possible implications on the Indian market and the economy before the next Union budget
On tax exemption on direct listing overseas by domestic companies, the report said the finance ministry has held discussions with startups keen on direct listing on foreign bourses.
Some of the startups such as Paytm, Policybazar and Zomato have since then come out with their public offers and listed on domestic bourses.
The corporate affairs on its part had earlier demanded that foreign investors be exempted from capital gains tax on investment in these stocks, according to the Times of India report, which added that the revenue department, however, did not agree to it then.
The report further noted that the proposed tax exemption may not yield the desired results because the liquidity may get sucked out once the US Fed begins tapering. Some Indian companies could have gained from the pressure on Chinese stocks after the crackdown on tech companies by Beijing, it said.
The newspaper quoted a Morgan Stanley report which has said that besides direct benefits of Indian bonds inclusion in global indices such as expected $170-billion inflows over the next 10 years, lifting Indian bond prices and lowering borrowing costs, it could have major tangible implications on the domestic currency, corporate bonds and equities. Indian bonds at present are not a part of any global bond index. It may be included by 2022.