India has removed the 12.5% long-term capital gains tax on G-Secs for FPIs to attract investments and align with global markets. While this could lead to significant inflows and bolster foreign reserves, challenges like currency volatility and market conditions may limit immediate benefits. Experts recommend extending tax relief to other debt instruments. “Government may consider exempting tax on corporate bonds in sectors that require long term debt capital, such as Infrastructure, large scale manufacturing, and green energy,” said Kumarmanglam Vijay, Partner and Head of Practice, Direct Tax – JSA Advocates & Solicitors. It may also consider providing a window to retail investors through a separate demat account locked in for a fixed term where they can park funds intended for the longer term and receive tax free status, he added. Read more
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