Government lists Bill in Parliament to replace Ordinance that exempted FIIs from tax

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.

At the time, the government said this action was taken in recognition of “the importance of a competitive tax framework in attracting global capital”.

The Bill listed for the Monsoon session will convert this Ordinance into an Act, if it is passed. 

“The Bill seeks to deepen India’s sovereign debt market, attract stable global capital inflows, and enhance liquidity in view of the prevailing global macroeconomic environment, marked by significant volatility arising from geopolitical uncertainties, sharp increases in crude oil prices, and disruptions in global supply chains,” the government informed Parliament while listing the Bill.