Fixed Income
5% TDS if Rent over Rs50,000pm
If a property-owner is getting a rent of more than Rs50,000 per month (pm), then the rent-payer is required to deduct tax at source (TDS) @5%. It will create a trail for the income-tax (I-T) department to ensure that the property-owner has shown the rent in her/ his tax returns and has paid the taxes. Anyone earning more than Rs6 lakh a year as rental income must declare it in the tax...
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'Secondary market liquidity needed to attract investors to corporate bonds'
Infusing some amount of secondary market liquidity can help attract retail investors to enter the corporate bonds space, a top Securities Exchange Board of India (Sebi) official said on Tuesday.
 
"As retail investor, when I get into bonds, I also think about liquidity. When I put money in the banks' fixed deposits, it is not merely for interest I get but also for liquidity it gives me -- that gives me a tremendous amount of comfort in addition to the return, though the return is much less. But I am satisfied because the liquidity is there," whole-time Sebi member G. Mahalingam said.
 
Mahalingam was speaking at the inauguration here of Associated Chambers of Commerce and Industry of India (Assocham) national conference on the bond market.
 
"If same were to be the case with the bonds, I am sure it is going to be an important, tempting factor for retail investors to come into the bonds space; that is where perhaps some amount of secondary market liquidity is needed," he added.
 
Mahalingam, however, emphasised the need to create that liquidity.
 
"Even with a much lesser liquidity, we can afford to live within the corporate bond world," he said.
 
"If we can open up connectivity, if the banks can play a role in the exchange traded platform segment, we are going to have a bond market where perhaps the liquidity will go unchallenged and perhaps match the liquidity levels in the US," Mahalingam said.
 
The Sebi member said that it must be seen whether regulators like IRDA (Insurance Regulatory and Development Authority), PFRDA (Pension Fund Regulatory and Development Authority) have created that kind of a bandwidth for the insurance companies, for the pension and provident funds to invest in the bond market.
 
He said that on an average, the portfolio return cannot be more than 200-300 basis points in corporate bonds.
 
"If we understand this reality, then we will say that bonds are really-really good investments; if we do not look at this reality and if we continue to live in an utopia that I am going to earn a return which is going to be double-triple of the bank deposits, we do not touch the bonds at all -- this is the problem," he said.
 
He lamented that most people do not realise that bond markets are growing. 
 
"One stark fact now is that bond markets growth this year has outstripped the bank credit growth, which is surprising; it has never possibly happened in the past at all."
 
The bank deposit growth this year is almost close to about 10 per cent -- bank deposits stand at Rs 105 lakh crore. The bank credit has grown by an abysmal 4.8 per cent this year -- it is around Rs 73 lakh crore. 
 
"If you look at correspondingly the bond market, it has really grown by leaps and bounds."
 
Talking about government initiatives to boost corporate bond markets in India, Mahalingam said the insolvency regime is finally in place; besides, enablers have also been put in place. So, today, there is no reason why people should feel sceptical about investments in bonds, he added.
 
He said that the government's borrowing budget in the current year has come down by almost Rs two lakh crore, which is going to be a great enabler for the corporate bonds to come into the picture.
 
"There is a Rs 2 lakh crore space left vacant, which has to be absorbed possibly by the corporate bonds. Some of it is already in the form of commercial paper. The certificate of deposits is coming down since obviously the banks are no longer in need of deposits pouring in since November 9, 2016," Mahalingam said.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Property Hoarders Will Pay More Tax
The Union Budget for 2017 eliminated the loophole regarding tax exemption of interest on home loan on property let out which was helping property hoarders. The set-off loss, calculated as home loan interest minus the rental income, will now be restricted to Rs2 lakh.  Additional loss can be carried forward for eight years. 
 
For example, if an individual has a second home earning a...
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