Budget 2019: Tax Sops For Retail Investors In Corporate Bonds Sought

In a pre-budget meeting with the FM, market players also pitched for additional tax sops for investments in term insurance plans.

 Finance Minister Nirmala Sitharaman will present the full Union Budget 2019 on July 5. (Photo: PTI)
Finance Minister Nirmala Sitharaman will present the full Union Budget 2019 on July 5. (Photo: PTI)

Presenting their proposals for Union Budget 2019, financial and capital market players on Thursday urged Finance Minister Nirmala Sitharaman to extend tax incentives to retail investors in corporate bonds, and also pitched for additional sops for investments in term insurance plans.

In the pre-budget meeting, financial and capital markets players made suggestions concerning infusion of capital in niche or regional banks, enhanced role of Financial Sector Development Council in non-banking financial companies and creation of dedicated liquidity window for NBFCs.

The full Union Budget 2019 is scheduled to be presented on July 5.

“(We) Discussed how to enhance corporate bond market. At present, retail investors invest through mutual funds. If some tax benefits can be extended to retail investors also, just like it has extended to mutual funds, they would benefit and corporate bond market,: IDBI Bank Ltd. chief executive Rakesh Sharma told reporters in Delhi after the meeting.

Subhash Chandra Khuntia, chairman of the Insurance Regulatory and Development Authority of India, said that he suggested additional tax incentives for term plans to encourage investments, like in the case of National Pension Scheme.

The financial and capital market representatives also suggested review of interest rates on government’s small savings schemes, review of bad loan provisions through setting-up a committee, setting-up of a debt exchange traded fund, domestic capability building in audit and credit rating, rationalisation of various taxes like security transaction tax in the capital market.

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They also sought setting up of a separate bond exchange, allowing banks to invest in Infrastructure Investment Trusts to access broader market and make corporate tax progressive to incentivise Micro, Small and Medium Enterprises, among others.

“Lot of suggestions have come regarding infrastructure financing, reviving the economy and what tax benefits can be given for encouraging investments in MSME, exports,” said State Bank of India chairman Rajnish Kumar.

“Liquidity is not a major challenge right now,” said Sunil Mehta, managing director and chief executive officer of Punjab National Bank.

Discussion during the meeting also centred around issues relating to the capital markets, financial sector, NBFCs and Alternative Investment Funds, among others.

The meeting was also attended by Minister of State for Finance Anurag Thakur, Finance Secretary Subhash Garg, Expenditure Secretary Girish Chandra Murmu, Revenue Secretary AB Pandey, Financial Services Secretary Rajeev Kumar, DIPAM Secretary Atanu Chakraborty, and other senior officials of the finance ministry.

RBI deputy governor NS Vishwanathan, Sebi whole-time member G Mahalingam, Kotak Mahindra Bank CEO Uday Kotak, Central Bank of India CEO Pallav Mohapatra, Punjab & Sind Bank CEO S Harisankar, IDFC Bank CEO V Vaidyanathan and other key stakeholders were also present in the pre-budget meeting.

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