New Delhi, June 5 -- Centre has granted tax exemption to Foreign Institutional Investors on capital gains and interest income arising from investments in government securities. The government has promulgated the Income-tax (Amendment) Ordinance, 2026, in this regard. Union Finance Ministry said this step will align the taxation on Government Securities with many comparable jurisdictions. The exemption will be applicable from 1st April this year.

The Ministry added that the exemption will apply to any interest or capital gains arising to Foreign Portfolio Investors on or after 1st April in respect of investments in Government Securities. It said a similar income-tax exemption is also provided for the Bank for International Settlements for...