An experts' committee on corporate bonds and securitisation has recommended uniform stamp duty for all states. As stamp duty happens to be a "states" subject, its rate varies.

Tax experts contend that the move to have uniform stamp duty on debt instruments will lower the transaction cost of debt instruments.

"For retail investors, which want to put money in a less volatile market, investing in debt instruments will become cheaper. The lowering of transaction costs will also help make the debt market more mature," Rahul Garg, executive director of PricewaterhouseCoopers' said.

The committee has also suggested that interest rates paid on small savings instruments be aligned with market rates.

"The resultant fiscal savings can be used to provide tax benefits for municipal bonds and for credit enhancements for bonds issued by special purpose vehicles for infrastructure development," the committee headed by RH Patil, a former UTI AMC chairman, has said in its report.

The committee, whose recommendations have been put on the Internet by the finance ministry for public comments, has also said that a plan should be drawn up to develop a municipal bond market in India.

"Municipal bonds may be given some fiscal support... so that municipalities are encouraged to issue such bonds for developing urban infrastructure," the report has said.

Stating that there is a strong case for creating specialised debt funds to cater for the needs of the infrastructure sector, it has said that foreign debt be allowed in infrastructure debt funds registered with the Securities and Exchange Board of India, at a stage considered appropriate by the Reserve Bank of India [Get Quote].

The committee has also underscored the need to enhance the investor base in the market. "Retail investors should be encouraged to participate in the market through stock exchanges. Such investors should also be encouraged to participate in the corporate bond market through mutual funds," the report has said.

While there is a strong case for disclosures to be substantially abridged for listed entities, the committee has said companies that have no securities listed at the exchanges, or have listed only privately placed bonds, be subjected to stringent disclosure requirement, if they wish to float a public issue.

"For unlisted companies issuing bonds to institutional investors, the rating rationale should form the basis for listing," it has said.

The committee has also said that non-compliance with listing agreements should result not only in suspension or de-listing of securities but also heavy penal action against promoters or directors of defaulting companies.