Govt exempts capital gains tax on FIIs' govt bond investments

With an purpose to pull overseas capital, the authorities connected Friday promulgated an ordinance to exempt superior gains taxation connected investments made by Foreign Institutional Investors successful authorities securities, according to a PTI report.The determination is aimed astatine making Indian indebtedness markets much charismatic to overseas investors portion helping shield the system from the effects of the continuing Iran conflict.The Union Cabinet, chaired by Prime Minister Narendra Modi, approved an ordinance connected Wednesday to amend the Income Tax Act and facilitate the projected exemption.Currently, overseas investors are taxable to a 12.5% semipermanent superior gains taxation connected listed equities and bonds held for much than 1 year.

Interest earned connected authorities securities is besides taxed done a 20% withholding levy. A concessional 5% taxation complaint that was antecedently disposable to overseas investors was withdrawn successful 2023.The authorities is besides expected to present further initiatives designed to promote overseas superior inflows.The proposals travel against a backdrop of sustained overseas money outflows, with marketplace participants repeatedly calling for little semipermanent superior gains taxation rates and reduced withholding taxes connected involvement income from authorities securities.

The timing is significant, arsenic overseas portfolio concern flows person remained antagonistic portion the rupee has faced sizeable unit against the US dollar amid the continuing struggle successful West Asia.Since the commencement of the existent calendar year, nett FPI outflows person reached Rs 2.47 lakh crore, much than treble the Rs 1.04 lakh crore withdrawn during calendar twelvemonth 2025.The rupee had weakened to a grounds debased of 96.965 against the dollar connected May 20 earlier recovering partially. The betterment was aided by RBI involution and softer crude lipid prices pursuing renewed diplomatic efforts betwixt the US and Iran.This communicative is being updated