The Income-tax (Amendment) Ordinance, 2026, promulgated by the President under Article 123 of the Constitution, amends Schedule W of the Income-tax Act, 2025 with retrospective effect from 1 April 2026. The Ordinance introduces new entries granting income-tax exemptions to Foreign Institutional Investors (FIIs) and the Bank for International Settlements (BIS) in respect of interest earned on Government securities and capital gains arising from their sale, exchange, or transfer. The exemptions are subject to furnishing prescribed information in the prescribed form and manner. The amendment also inserts explanatory definitions clarifying that “Bank for International Settlements” refers to the international institution headquartered in Basel, Switzerland, “Foreign Institutional Investor” carries the meaning assigned under the Income-tax Act, and “Government security” has the meaning assigned under the Government Securities Act, 2006. The measure is aimed at facilitating investment in Government securities by specified foreign institutional investors and international financial institutions through a clear tax exemption framework.
MINISTRY OF LAW AND JUSTICE
(Legislative Department)
New Delhi the 5th June, 2026/Jyaishtha 15, 1948 (Saka)
THE INCOME-TAX (AMENDMENT) ORDINANCE, 2026
No 2 OF 2026
Promulgated by the President in the Seventy-seventh year of the Republic of India.
An Ordinance further to amend theIncome-tax Act, 2025.
WHEREAS, Parliament is not in session and the President is satisfied that circumstances exist which render it necessary for her to take immediate action;
NOW, THEREFORE, in exercise of the powers conferred by clause (1) of article 123 of the Constitution, the President is pleased to promulgate the following Ordinance:
1. Short title and commencement.
(1) This Ordinance may be called the Income-tax (Amendment) commencement. Ordinance, 2026.
(2) It shall be deemed to have come into force on the 1st day of April, 2026.
2. In the Income-tax Act, 2025, in Schedule W,
a. in the Table, after serial number 13C and entries relating thereto, the following shall be inserted, namely:
| A | B | C | D |
| “13D. | Any interest on Government security, and any capital gains arising from the sale, exchange or transfer of such Government security | A Foreign Institutional Investor. | Such exemption shall be subject to furnishing of information in such form and manner, as may be prescribed. |
| 13E. | Any interest on Government security, and any capital gains arising from the sale, exchange or transfer of such Government security. | Bank for International Settlements. | Such exemption shall be subject to furnishing of information in such form and manner, as may be prescribed.”; |
(b) after Note 3 below the Table, the following Note shall be inserted, namely:
`Note 4: For the purposes of Sl. Nos. 13D and 13E,
(a) “Bank for International Settlements” means the Bank for International Settlements established at the Hague Conference in 1930 and headquartered at Basel, Switzerland;
(b)”Foreign Institutional Investor” shall have the meaning assigned to it in section 210(6)(a);
(c) “Government security” shall have the same meaning as assigned to it in section 2(f) of the Government Securities Act, 2006.’.
