Debt MFs retain tax advantage over RBI retail direct scheme

Prime Minister Narendra Modi recently inaugurated the RBI Retail Direct Platform through which retail investors can directly buy government bonds as well as sovereign gold bonds. With the exception of sovereign gold bonds, there are no tax benefits for investment in government bonds through this platform. This leaves the strategy of directly buying government bonds at a distinct disadvantage compared to mutual funds. The liquidity in the secondary market for small quantities of such bonds also tends to be poor.

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