Sebi stresses on need to remove tax 'anomalies' in bond market

New Delhi: Market regulator Securities and Exchange Board of India has sought clarity in taxation on real estate investment trust, infrastructure investment trusts and debt securities in the forthcoming budget that would draw investors to the markets.

“Sebi will soon finalize norms for REITs, but is awaiting clarity on taxation issues,” Sebi chairman UK Sinha said on Saturday. The regulator wants a pass-through status for investment trusts and a uniform withholding tax rate for all categories of bonds.

A pass-through tax status would mean that the trust itself does not face any tax but investors are taxed on their profits individually. He said Sebi was ready with guidelines that would be announced immediately after tax clarity from the government. Sinha also highlighted the issue of “certain anomalies in withholding tax on debt securities” and hoped for a quick resolution. Currently, tax rates vary for different categories of debt.

“All that we have asked the government is that try and reconcile it because if you are looking for long term and big money, especially for infrastructure companies, so long as the anomalies exist people will hesitate to invest. That is the point we are making,” Sinha said. Sinha also stressed on the need to encourage small and medium enterprises to get listed.