Government to Table Income-Tax Amendment Bill Replacing FII Tax-Exemption Ordinance
The Union Government has listed the Income-tax (Amendment) Bill, 2026 for the upcoming Monsoon Session of Parliament to replace the ordinance promulgated on June 5, 2026, which had exempted Foreign Institutional Investors (FIIs) and the Bank for International Settlements (BIS) from capital gains tax and tax on interest from their investments in government securities. The ordinance was issued because Parliament was not in session and immediate action was deemed necessary. As per constitutional procedure, an ordinance must be replaced by an Act of Parliament, prompting the Bill's introduction in the Monsoon Session.
Key Facts & Details
7 points- 1The Centre listed the Income-tax (Amendment) Bill, 2026 for the Monsoon Session to replace a June ordinance.
- 2The ordinance was promulgated on June 5, 2026, when Parliament was not in session.
- 3It exempted Foreign Institutional Investors (FIIs) and the Bank for International Settlements (BIS) from capital gains tax on government securities.
- 4It also exempted interest income from such government securities from tax.
- 5An ordinance must be replaced by parliamentary legislation, hence the Bill's introduction.
Deep Dive
- +The exemption aims to make Indian government securities (G-Secs) more attractive to foreign investors.
- +Ordinances under Article 123 have limited life and must be approved by Parliament within six weeks of its next session.
Exam Focus
The Income-tax (Amendment) Bill, 2026, replaces an ordinance that exempted which entities from capital gains tax on G-Secs?
Related Topics
Exam Relevance & Angle
Legislation and ordinance-to-Bill conversion is a core polity + economy topic. The named Bill, the FII/BIS exemption and the G-Secs link are precise, testable facts.
Target Exams
Background & Context
Under Article 123 of the Constitution, the President can promulgate an ordinance when Parliament is not in session and immediate action is needed; it has the force of law but must be laid before Parliament and replaced by an Act within six weeks of reassembly, or it lapses. Foreign Institutional Investors (FIIs) invest in Indian securities markets, and government securities (G-Secs) are sovereign debt instruments. Tax exemptions on G-Sec gains aim to deepen foreign participation in India's bond market.
Test Yourself
1 / 2The Income-tax (Amendment) Bill, 2026, replaces an ordinance that exempted FIIs and which institution from capital gains tax on government securities?
Source
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