Income Tax Act 2025: Key FAQs on Proposed Tax Exemption for FIIs Investing in G-Secs
The Government has issued FAQs explaining the proposed tax exemption for Foreign Institutional Investors (FIIs) under the Income Tax Act 2025 on investments in Government Securities (G-Secs). The proposal aims to exempt both interest income and capital gains earned by FIIs from eligible government bonds, making India’s debt market more attractive to foreign investors. Currently, FIIs are taxed at 20% on income from securities, with capital gains taxed at higher rates depending on holding period. The new framework under Section 210 is expected to significantly reduce tax burdens, encourage foreign inflows, improve liquidity in government bonds, and strengthen India’s position in global bond indices.