New Delhi, Aug. 7 -- Foreign investors in Indian government bonds will get an income-tax exemption on interest earnings and capital gains under the Taxation and Other Laws (Amendment) Bill, 2026, which was passed in Lok Sabha on Thursday.

The Bill provides the exemption to Foreign Institutional Investors (FIIs) investing in government securities (G-Secs), covering interest earned on such securities as well as capital gains arising from their sale, exchange or transfer.

The provision is part of amendments to Schedule IV of the Income-tax Act, 2025. The exemption will be subject to FIIs furnishing information in the form and manner prescribed by the government.

The move gives legislative backing to a tax relief that was earlier introduce...