Government lists Bill in Parliament to replace Ordinance that exempted FIIs from tax
The Indian government has introduced a Bill to replace a June 2026 Ordinance that exempted foreign institutional investors from capital gains tax on government securities. This legislative move aims to attract global capital and deepen the sovereign debt market amidst global economic volatility.
Why it matters
This policy change is a strategic effort to stabilize India's financial markets and maintain competitiveness in attracting foreign investment.
The Government has listed a Bill that it plans to table in the upcoming Monsoon Session of Parliament to replace its June Ordinance through which it had exempted foreign institutional investors (FIIs) and the Bank of International Settlements (BIS) from capital gains tax and tax on interest from their investment in government securities.
The President of India, on behalf of the Union Government, had on June 5 promulgated the Income-tax (Amendment) Ordinance, 2026, since Parliament was not in session at the time and she was “satisfied that circumstances exist which render it necessary for her to take immediate action”.
Govt. exempts capital gains tax on FPI investment in G-Secs
The Ordinance had exempted from tax “any interest on Government security, and any capital gains arising from the sale, exchange or transfer of such Government security” by any FIIs and the BIS.
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