The Reserve Bank of India, on Wednesday, set up a working group to study various issues relating to taxation of financial instruments.

The working group is expected to suggest appropriate rationalisation measures to boost private financial savings.

It will review the current tax structure as applicable to various financial instruments issued in the Indian financial system. It will also identify possible ‘tax arbitrage’ among financial instruments under the extant tax structure. Also, it will suggest rationalisation of tax treatment across financial instruments to promote financial savings and for minimising distortions, taking into account the recommendations of earlier committees in this regard and the draft Direct Taxes Code.

Balbir Kaur, Adviser, Department of Economic and Policy Research, Reserve Bank of India, will be the convenor of the group. It is expected to submit its report within three months of its first meeting.