Equity Securities proposes tax rationalisation to cut financing costs

To spur the corporate bond market, the authors call for aligning tax treatment of bonds and equities. Currently, India's bond market represents roughly 18% of GDP, while equities account for about 130% of GDP. Matching tax rules could expand the bond market to Chinese levels, unlocking an extra INR 54 lakh crore of financing capacity. Borrowers could save around INR 2.2 lakh crore annually, equivalent to 0.63% of GDP before multiplier effects.