Centre Not Planning Tax Changes To Help Bond Inclusion On Global Indices: Report

The central government is targeting a fiscal deficit of 5.9 per cent of GDP for the financial year ending March 31, 2024 and will borrow Rs 6.55 trillion ($78.70 billion) in the October-March period

The government imposes a 20 per cent withholding tax on foreign investors buying and selling local debt, seen as a deterrent for traders, as well as index providers.

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The Centre is not planning any changes to its tax regime to help government bonds be included on other global indices, citing a source privy to the development news agency Reuters said on Wednesday. According to the report, JPMorgan's decision last week to include India in its emerging market bond index from June 2024 is likely to bring in around $25 billion, as per analysts' estimates. Fellow index provider FTSE Russell, which has India on the watchlist for inclusion, has a review scheduled later this week. The Bloomberg indexes do not include India either.

The government imposes a 20 per cent withholding tax on foreign investors buying and selling local debt, seen as a deterrent for traders, as well as index providers. The Finance Ministry did not immediately reply to an email from Reuters.

According to the source, who did not want to be named because he is not authorised to speak to media, also said the central government's revenue and expenditure was in line with budget estimates so far. The government has spent 40 per cent of its budgeted capital expenditure by early September, the source said.

The central government is targeting a fiscal deficit of 5.9 per cent of GDP for the financial year ending March 31, 2024 and will borrow Rs 6.55 trillion ($78.70 billion) in the October-March period. Net borrowing during that period will be Rs 3.74 trillion, which includes repayment of 2.81 trillion rupees on account of securities maturing, the person said.

In an another development, the income tax department issued norms regarding the valuation of equity and compulsorily convertible preferable shares issued by start-ups to resident and non-resident investors. The revised norms are effective from September 25, the government said.

According to the changes in Rule 11UA of the I-T rules, the Central Board of Direct Taxes (CBDT) stated that the valuation of compulsorily convertible preference shares (CCPS) can also be decided on the fair market value of unquoted equity shares. The revised norms also retain the five new valuation methods suggested in the draft rules for consideration received from the non-resident investors, reported PTI.