Key Highlights Of The Ordinance
The Ordinance amends Schedule IV of the Income-tax Act, 2025, by inserting two new categories, 13D and 13E, that provide tax relief on specific financial instruments.
Under these new entries, interest earned on Government securities, as well as capital gains arising from the sale, exchange, or transfer of such securities, are now exempt from income tax for specific entities. There will also be no withholding tax on investments in government securities.
Who Are The Benefits Granted To?
- Foreign Institutional Investors (FIIs) as defined under the relevant provisions of the Income-Tax Act, 2025.
- Banks for International Settlements (BIS) as defined as the institution established in 1930 and headquartered in Basel, Switzerland.
To avail of these exemptions, eligible entities are required to furnish information in a prescribed form and manner, ensuring transparency and regulatory oversight.
The decision ordinance is deemed to have come into force retrospectively from April 1, 2026.
What Are The Changes To The Fully Accessible Route?
Government Securities under the Fully Accessible Route (FAR) have also been expended, by including all new issuances of 15, 30 and 40-year tenure government securities.
Additionally, the limits on investments by NRIs and OCIs in equity instruments on the stock market without SEBI registration are being increased. All individual Persons Resident Outside India (PROIs) are also proposed to be extended the same facility on par with NRIs and OCIs, Governor Malhotra said in his speech.
A facility of concessional forex swap is being provided till September 30, 2026 to incentivize three to five year External Commercial Borrowings (ECBs) by CPSEs.
This is breaking news and will be updated with more details.
