The Indian government has passed the Taxation and Other Laws (Amendment) Bill, 2026 in the Lok Sabha to encourage more foreign investment in the country.
The main aim of the bill is to attract foreign investors to invest in Indian government bonds and increase the flow of foreign exchange into India.
The bill was opposed by the Opposition during the debate but was eventually passed through a voice vote in the Lok Sabha. It replaces the ordinance that was issued on June 5.
Tax Relief for Foreign Investors
Under the new bill, Foreign Institutional Investors (FIIs), Foreign Portfolio Investors (FPIs),
and the Bank for International Settlements (BIS) will not have to pay tax on the interest and capital gains earned from investments in Indian government bonds.
This tax exemption is expected to make Indian government bonds more attractive to foreign investors and encourage higher investments.
Government’s Objective Behind the Bill
According to the government, the new law will help bring more foreign investment into India.
Increased investment is expected to reduce the government’s borrowing costs, ease pressure on the Indian rupee, and strengthen the country’s economy.
The government said this step has been taken considering the recent global economic conditions and market volatility.
Other Key Changes in the Bill
Apart from government bonds, the bill also includes several measures to promote foreign investment in different sectors.
Tax rules for offshore investment funds have been simplified, which is expected to help India become a major global fund management hub.
In addition, certain tax rules related to the electronics manufacturing sector, data centers, and the diamond industry have been relaxed.
The government believes these changes will improve investor confidence, make it easier to do business in India, and attract more long-term foreign investment.
