At a time when India is facing multiple challenges – rising crude oil prices, risk of inflation and the prospect of a weaker monsoon – the government has announced a series of reforms aimed at making India a leading destination for foreign investors. The Centre on Friday promulgated the Income-tax (Amendment) Ordinance, 2026, granting tax exemption to Foreign Institutional Investors (FIIs) on capital gains and interest income arising from investments in government securities (G-Sec).
With a view to enhancing participation by Foreign Portfolio Investors (FPIs) in G-Sec, the government has decided to expand the list of specified securities under the Fully Accessible Route (FAR) to also include new issuances in Government securities.
According to the notification, “Any interest on Government security, and any capital gains arising from the sale, exchange or transfer of such Government security” shall be exempt in the case of “a foreign institutional investor.”
