The government has introduced legislation for the upcoming Monsoon Session of Parliament to convert a June Ordinance into law. The measure exempts foreign institutional investors and the Bank for International Settlements from capital gains tax and tax on interest earned from investments in government securities.
In June, the President promulgated the Income-tax (Amendment) Ordinance, 2026, while Parliament was not in session, citing the need for immediate action. The Ordinance waived tax on interest from government securities and on capital gains from their sale or transfer by qualifying foreign investors.
Officials described the step as necessary to maintain a competitive tax system that draws international funds. The new Bill aims to strengthen India’s sovereign debt market, encourage steady foreign investment, and improve liquidity amid global economic uncertainty, including geopolitical tensions, rising oil prices, and supply chain issues.
