Tax benefits planned for overseas listing – Times of India

NEW DELHI: The finance ministry is ready to offer tax benefits for direct listing of shares overseas as well as for settlement of bonds, which are part of global indices via Euroclear, but is holding consultations with the ministry of corporate affairs and the RBI to ensure that capital gains exemption, that has been proposed, does not go waste.
Although the RBI has been pushing for it privately, some officials have warned of possible adverse impact of the move to include Indian bonds in global indices. Government sources told TOI that the finance ministry has asked the central bank to weigh all the possible implications on the Indian market and the economy before the Budget.
“Various claims have been made by the so-called experts and we want to be sure that the move will actually benefit us,” said a source.

Similarly, in case of direct listing of Indian shares on foreign exchanges, the finance ministry has consulted some of the Indian startups, which had earlier told the government that they were intending to list overseas.
Since the move was initiated over a year-and-a-half ago, startups such as Paytm, Policybazaar and Zomato have already listed in India, diminishing the immediate need for tax breaks. The ministry of corporate affairs had sought the capital gains exemption for overseas investors in these stocks before the last Budget itself, but the revenue department did not agree to it.
Given that the liquidity is expected to be sucked out due to the taper, the tax exemption, if it comes, may be a little late in the day. Many were hoping that some of the Indian companies could have benefited from the pressure on Chinese stocks after the crackdown on tech companies by the authorities in Beijing.
A Morgan Stanley report has said that beyond the direct benefits of index inclusion — it could trigger $170 billion in bond flows over the next decade, lifting Indian bond prices, while lowering borrowing costs — this milestone could have profound implications for the country’s currency, corporate bonds and equities.
India, despite its significant economic progress, is not part of any global bond index and expectations are that it will be part of the indices by 2022. The Morgan Stanley report said that inclusion in global bond indices could also help Indian corporations with capital needs. The Centre has taken several steps to deepen the corporate bond market and inclusion in global bond indices will provide a major boost.