To boost investor participation in India’s recently launched Retail Direct Scheme (RDS), which allows retail investors to directly invest in government bonds online in small sizes, the Reserve Bank of India (RBI) is said to be lobbying for similar tax benefits as debt funds. Currently, under the RBI Retail Direct Scheme, retail investors are fully taxed on their income from government bonds as per their income tax slab every year. On the other hand, retail investors in debt mutual funds are taxed only when they redeem their funds as per the capital gains tax. If investors hold the debt fund for more than three years, they will be charged a capital gains tax of 20% with the benefit of indexation (Term of the Day). Thus from a tax perspective, the RBI Retail Direct Scheme is less favourable to retail investors compared to debt funds that invest in government bonds. The RBI is thus said to be lobbying with the central government for a similar tax treatment.
This move is likely to attract global fintech companies like ours; Rahul Banerjee, CEO of BondEvalue commented, “We see massive demand from non-resident Indians (NRIs) globally to invest in India. Using our digital platform, we want to allow every man’s money to be invested in government securities and government linked securities.”
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