India's inclusion in global bond indices faces taxation hurdle

Fund managers want govt to freeze taxes on sovereign debt papers

India’s entry into the global bond indices has got postponed because of tax changes sought by their managers. They have also demanded that India list its sovereign debt papers on leading international central securities depositories like Clearstream. This means that taxes on these papers, such as withholding tax, will need to be frozen. The government will have to give in writing that taxes will not be changed to the disadvantage of investors.

Over the past two years, both the finance ministry and the Reserve Bank of India (RBI) have been in discussion with the managers of at least three global