India’s lower house has passed a new tax exemption bill aimed at attracting foreign investors to government bonds, seeking to deepen domestic debt markets and strengthen the rupee amidst global market volatility.
India’s lower house has passed a tax exemption bill that aims to make government bonds more attractive to foreign investors and widen the country’s appeal as a destination for long-term capital. According to the informalnewz.com report, the measure is intended to reduce the tax burden on certain overseas investors and support inflows into Indian debt markets, with the government arguing that greater participation should help ease borrowing costs and provide a modest buffer for the rupee.
The legislation, which replaces an ordinance issued on 5 June, gives tax relief on interest and capital gains from Indian government bond investments to foreign institutional investors and the Bank for International Settlements, according to the report. That proposal comes as New Delhi looks for ways to deepen foreign participation in domestic fixed-income markets, a goal that has gained importance as global funding conditions remain uneven.
The move sits alongside a broader package of fiscal and tax changes already cleared by the Lok Sabha this year. KPMG said the Finance Bill, 2026, was passed on 25 March and included revisions such as taxation of share buybacks as capital gains, a longer tax holiday for offshore banking units and changes to reassessment procedures, while BDO reported more than 30 amendments designed to strengthen taxpayer rights and rationalise the shift to the Income-tax Act, 2025. Livemint and Business Standard both reported that the finance legislation also dealt with buyback tax treatment, startup relief and limits on coercive recovery measures.
Taken together, the measures suggest a wider policy effort to improve India’s investment climate by combining tax simplification with targeted incentives. The latest bill also extends relief beyond sovereign debt, with the informalnewz.com report saying it relaxes rules for offshore investment funds and eases some tax provisions affecting electronics manufacturing, data centres and the diamond sector. The government’s case is that these changes should encourage confidence among foreign investors at a time of market volatility and support India’s bid to become a larger centre for global fund management.
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