To promote financial savings, the Reserve Bank of India (RBI) has constituted a working group to study various issues relating to taxation of financial instruments in India and suggest rationalisation. Members of the working group includes Y H Malegam, director, central board, RBI and H P Ranina, a corporate tax lawyer.
He is also a former director, central board, RBI. Shilpa Kumar, senior general manager, ICICI Bank, is also a member of the working group. The terms of reference will be to review the current tax structure as applicable to various financial instruments issued in the Indian financial system. It shall also include identification of possible ‘tax arbitrage’ among financial instruments under the extant tax structure and to suggest rationalisation of tax treatment across financial instruments. The suggestions for rationalisation will be done to promote financial savings and to distortions. This would also take into account the recommendations of earlier committees in this regard and the draft Direct Taxes Code. The working group is expected to submit its report within three months of its first meeting.