EconomyWednesday, 10 June 2026·The Hindu - Economy
Government exempts FPI capital gains tax on government securities from April 1, 2026
India exempted foreign portfolio investors from capital gains tax on government securities and expanded the FAR basket to include more bonds.
Key highlights
Direct fact
On June 5, 2026, the Government of India exempted foreign portfolio investors (FPIs) from the 12.5% long-term capital gains tax on investments in government securities, with the exemption लागू from April 1, 2026.
Key specifics
- The exemption covers income tax on interest and capital gains from FPI investment in Government Securities.
- 15-year, 30-year and 40-year tenor bonds were added to the Fully Accessible Route (FAR) framework.
- Sovereign Green Bonds (SGBs) were also included in the FAR basket.
- The overall quantitative investment limit remains 6% of outstanding Central Government securities and 2% of State Government securities.
- As of June 5, 2026, FIIs bought ₹16,567 crore in FAR bonds and sold ₹4,025 crore in the general route.
Exam lens
Economy and financial markets MCQ focus: FPI tax exemption, FAR framework, bond tenors, investment caps. TNPSC may ask the date of applicability, the tax rate waived, and the securities added to FAR.