Tax sops for corporate bonds likely

“Bringing liquidity in the corporate bond market is an issue for long. Government is ready to put whatever is there to get it going. We may consider tax incentives,” a finance ministry official said.

The ministry would also hold discussions with representatives of financial institutions, like Morgan Stanley, ICICI Securities, PNB Gilts, AK Capital and Tata Group, on steps for boosting corporate bond market.

At present, government securities are preferred over corporate bonds as they enjoy sovereign guarantee and are highly liquid as compared to bonds. Sources said tax benefits could include reduction in securities transaction tax and stamp duty, besides withdrawal of withholding tax.