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Citi Says Scrapping India Bond Tax in Budget Key to Lower Yields

Jan. 20, 2022, 3:18 AM

Indian bond yields may head higher if the February budget doesn’t include abolition of capital gains tax on bonds to facilitate Euroclear inclusion, Citi economists including Samiran Chakraborty, wrote in note.

  • Indian authorities understand the necessity to do away with capital gains tax on bonds and discussions are ongoing for a potentially higher level of withholding tax on coupon to make up for lost revenue from exemption of capital gains tax as withholding tax can be easily processed by Euroclear
  • Achieving such important milestones may trigger pre-positioning for index inclusion. Even with the passage of tax changes, passive index ...

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