Foreign Investment In Govt Bonds Likely To Be Exempt From Taxes: Sources | India Business Hour

Why It Matters

Tax exemptions for foreign investors could spur foreign inflows, deepen India’s G-sec market and lower borrowing costs, while also affecting short-term fiscal revenue. The ordinance route signals urgency to attract overseas capital ahead of parliamentary approval.

Summary

The Indian government has decided at the highest level to exempt foreign institutional investors’ holdings in government securities from taxes, sources say. The move would scrap a steep 20% withholding tax on interest and remove a roughly 5.5% capital gains tax for FIIs. Officials plan to implement the changes quickly via an ordinance, then formalize them through amendments to the Income Tax Act when Parliament reconvenes. The step is intended to boost foreign participation in the government bond market.

Original Description

Investment made by Foreign Institutional Investors (FIIs) in government securities (G-Secs) is likely to be exempt from all taxes, sources in the know told CNBC-TV18, on Thursday, June 4.

#foreigninvestment #governmentbonds #indiabonds #bondmarket #fpi #foreigninvestors #governmentsecurities #indianeconomy #taxexemption #bondinvestment #fixedincome #sovereignbonds #cnbctv18

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