No Tax Tangle, FPIs Keen to Move G-Sec Money Next Day
· Business · Economic Times
Foreign portfolio investors are pressing regulators and banks for faster remittance processes following the Indian government's recent tax exemptions on government securities. Offshore funds want the flexibility to remit sale proceeds a day after bonds are sold, replacing current procedures that require individual tax withholding letters from accounting firms for every transaction. Secondary market transactions in G-Secs settle on the next business day, but remittances typically take an extra day while custodian banks await these accountant letters. An Income-tax amendment ordinance issued on June 5, 2026, completely exempted FPIs from taxes on G-Secs effective April 1, 2026, scrapping withholding taxes on interest and capital gains. Representatives from fund houses, banks, and accounting firms met with RBI officials to discuss replacing individual transaction letters with quarterly or annual accountant confirmations.
Why it matters
Foreign portfolio investors gain streamlined capital movement and improved market efficiency, reducing settlement friction in Indian debt markets.
Read the original report — Economic Times
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