Govt to replace Ordinance by introducing Income-tax (Amendment) Bill in Monsoon session

New Delhi, The government plans to introduce the Income-tax (Amendment) Bill in the upcoming Monsoon Session of Parliament to replace the Ordinance effected to exempt foreign investors from income tax on interest earnings and capital gains from investment in G-secs.

The Ordinance was promulgated last month to attract foreign capital to ease pressure on the depreciating rupee due to the West Asia crisis.

The Income-tax (Amendment) Bill, 2026, will replace the Income Tax (Amendment) Ordinance, 2026, according to the list of new bills to be tabled in the upcoming session beginning July 20.


The Bill seeks to deepen India's sovereign debt market, attract stable global capital inflows, and enhance liquidity in view of the prevailing global macro-economic environment, marked by significant volatility arising from geopolitical uncertainties, sharp increases in crude oil prices, and disruptions in global supply chains, it said.

The government exempted foreign investors from income tax on interest earnings and capital gains from government securities as it looked to attract foreign capital to counteract pressure on the rupee.

The government promulgated an ordinance to amend the Income Tax Act to provide tax exemptions on interest income and capital gains arising from sale, exchange or transfer of government securities, effective from April 1, according to a gazette notification dated June 5.

Foreign investors are subject to a long-term capital gains tax of 12.5 per cent on listed shares and bonds held for more than 12 months. They also pay a withholding tax of 20 per cent on interest earned on government bonds.

The ordinance, signed by President Droupadi Murmu, defines the BIS as the international financial institution established in 1930 and headquartered in Basel, Switzerland. It also refers to the existing statutory definitions of FIIs and government securities under Indian law.

The gazette notification had said the Ordinance was necessary as Parliament was not in session and immediate action was required, invoking the President's ordinance-making powers under Article 123 of the Constitution.

Besides, the government is set to present Demands for Excess Grants for the year 2022-23.

In addition, the Micro, Small and Medium Enterprises Development (Amendment) Bill, 2026 will also be introduced in the House.

The Bill seeks to align the Micro, Small and Medium Enterprises Development Act, 2006 with changing MSME landscape, to enhance the Ease of Doing Business and bring trustbased regulations in the MSME ecosystem, to strengthen the mechanism for addressing delayed payments and provide for enforcement of arbitral awards for the MSEs, and to introduce flexibility and create enabling provisions for States to decide composition of Micro and Small Enterprises Facilitation Council (MSEFC).