CBDT exempts interest payments on rupee-denominated bonds issued by New Development Bank from TDS

The Central Board of Direct Taxes (CBDT) said in a notification issued on October 19 that it has exempted interest payments on rupee-denominated bonds issued by the New Development Bank from tax deduction at source for eligible investors.

According to the notification, the exemption applies to holders of Maharajah INR Bonds who are Indian residents or foreign institutional investors, for the 2026-27 tax year and subsequent tax years.

A Maharajah bond is an onshore, rupee-denominated bond issued within India. It is issued and settled in rupee (INR) rather than in foreign currencies.


This bond is sold inside India's domestic markets to both local and foreign institutional investors. This makes it different from Masala bonds, which are issued outside India -- in global markets.

The New Development Bank (NDB), established in 2015 by Brazil, Russia, India, China and South Africa (BRICS), is a multilateral lender that finances development projects in emerging markets and developing countries (EMDCs).

NDB's rupee bond programme is intended to strengthen India's domestic capital markets and enable the bank to fund projects in local currency, thereby limiting exchange-rate risks for borrowers, the bank's website notes.

Also read | Global investors against use of judicial anti-avoidance rule by tax officials

According to an ET report published in August 2026, the NDB plans to invest $7.5 billion in India over five years. The BRICS-backed lender aims to expand local-currency financing, offering emerging economies alternatives to funding denominated in dollars.

The bank is drawing up its General Strategy for 2027-2031, which will define its lending priorities and the allocation of funds among countries.