Parliament to debate Bill ending tax breaks for FIIs and BIS

The government had in June introduced an Ordinance that exempted foreign institutional investors and the Bank of International Settlements from capital gains tax and tax on interest from their investments in government securities

Source

The Hindu — Business →

Quick Revision

Prelims-testable facts

01The government introduced an Ordinance in June to exempt Foreign Institutional Investors (FIIs) and the Bank of International Settlements (BIS) from capital gains tax on their investments in government securities.
02The Ordinance was intended to amend Schedule IV of the Income-tax Act, 2025, to grant tax exemption on interest income and capital gains arising from Government securities to FIIs and BIS.
03The Income-tax (Amendment) Ordinance, 2026, exempted FIIs and BIS from tax on income earned from certain government securities.
04The Ordinance was introduced in June 2026, but the government plans to introduce a Bill in Parliament to replace it.
05Foreign Institutional Investors (FIIs) are entities that invest in Indian financial markets, while the Bank for International Settlements (BIS) is an international bank that facilitates global monetary transactions.
06The Ordinance exempted FIIs and BIS from capital gains tax on their investments in government securities, but not from other taxes.

Trap alerts

Most people think the Ordinance was introduced to benefit only FIIs, but actually it also benefited the Bank of International Settlements (BIS).
Most people think the Ordinance is still in effect, but actually the government plans to replace it with a Bill.

Mains Practice Question

Critically examine the implications of exempting foreign institutional investors from capital gains tax and tax on interest from their investments in government securities.

250 words

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Prelims Practice MCQs

Single facteasy

The Government has listed a Bill in Parliament to replace which Ordinance?

A.An ordinance related to the Right to Information Act
B.An ordinance exempting foreign institutional investors from capital gains tax and tax on interest from their investments in government securities
C.An ordinance amending the Companies Act
D.An ordinance related to the Prevention of Money Laundering Act

The Government has listed a Bill to replace an Ordinance that exempted foreign institutional investors and the Bank of International Settlements from capital gains tax and tax on interest from their investments in government securities.

Single factmedium

What is the name of the institution mentioned as being exempted by the Ordinance?

A.Bank of India
B.Reserve Bank of India
C.Bank of International Settlements
D.State Bank of India

The Bank of International Settlements is an international financial institution that provides liquidity to central banks, and was exempted by the Ordinance.

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