Income‑Tax (Amendment) Ordinance, 2026: FIIs, BIS Gain Exemption on Govt Securities [Read Notification]
The move is aimed at attracting global capital into India’s debt market, strengthening investor confidence, and aligning India’s taxation framework with international norms.
![Income‑Tax (Amendment) Ordinance, 2026: FIIs, BIS Gain Exemption on Govt Securities [Read Notification]](https://images.taxscan.in/h-upload/2026/06/06/2139301-income-tax-ordinance-fiis-bis-gain-exemption-govt-securities-taxscan.webp "Income‑Tax (Amendment) Ordinance, 2026: FIIs, BIS Gain Exemption on Govt Securities [Read Notification]")
The President of India has promulgated the Income‑Tax (Amendment) Ordinance, 2026 (No. 2 of 2026), introducing significant tax exemptions for foreign investors in Indian government securities. The Ordinance was issued under Article 123 of the Constitution, as Parliament was not in session and immediate action was deemed necessary. The Ordinance is deemed to have come into force...
The President of India has promulgated the Income‑Tax (Amendment) Ordinance, 2026 (No. 2 of 2026), introducing significant tax exemptions for foreign investors in Indian government securities. The Ordinance was issued under Article 123 of the Constitution, as Parliament was not in session and immediate action was deemed necessary.
The Ordinance is deemed to have come into force retrospectively from April 1, 2026.
Under the amendment to Schedule IV of the Income‑tax Act, 2025, two new entries, 13D and 13E, have been introduced to extend tax exemptions on income from government securities.
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- 13D: Exempts any interest on government securities and capital gains from their sale, exchange, or transfer, when earned by a Foreign Institutional Investor (FII).
- 13E: Grants the same exemption to the Bank for International Settlements (BIS).
Both exemptions are conditional upon furnishing prescribed information in the required form and manner.
The Ordinance further defines key terms to ensure clarity and consistency in application. The Bank for International Settlements (BIS) is described as the institution established at the Hague Conference in 1930 and headquartered in Basel, Switzerland.
The term Foreign Institutional Investor (FII) carries the meaning assigned under section 210(6)(a) of the Income‑tax Act, 2025, referring to foreign entities permitted to invest in Indian securities.
Meanwhile, Government security is defined in accordance with section 2(f) of the Government Securities Act, 2006, encompassing bonds and debt instruments issued by the Government of India.
These definitions collectively establish the legal framework for implementing the newly introduced tax exemptions under entries 13D and 13E.
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