Foreign investors impressed by the government’s masterstroke, deposited Rs 35 thousand crore in the treasury in 20 days

Foreign portfolio investors have invested about Rs 35,000 crore in Indian bonds so far this month. This investment has taken place after the government has given exemption from income tax on interest income and capital gains from investment in these bonds. Clearing Corporation of India Ltd. This information was obtained from the data. All these investments were made under the Full Access Route (FAR) to Indian Government Securities. Let us also tell you what kind of story the figures are telling.

investment of 35 thousand crores

According to statistics, the reason for this is that FAR allows non-resident investors to invest in fixed-tenure securities of the Government of India without any investment limit. On Tuesday, the stake of foreign portfolio in FAR Security came down to Rs 3.58 lakh crore, which was Rs 3.23 lakh crore on June 3. This means that an increase of Rs 35 thousand crore has been seen in just 20 days. Earlier, foreign investors had invested Rs 5,512.108 crore in May and Rs 5,262.016 crore in April. However, there was a withdrawal of Rs 17,687.988 crore in March.

Ordinance was issued on June 5

The government on June 5 issued an ordinance amending the Income Tax Act to provide tax exemption on interest income and capital gains arising from sale, exchange and transfer of government securities held by FPIs. This exemption will be applicable from the previous date of April 1, 2025. This step was taken by the government with the aim of attracting more foreign capital in the domestic bond market and supporting the rupee amid external pressure.

tax was levied

Currently, foreign investors have to pay long-term capital gains tax of 12.5 per cent on listed shares and bonds held for more than 12 months, while interest earned on government bonds attracts a withholding tax (TDS) of 20 per cent. The Reserve Bank of India this month expanded the scope of securities available under the FAR in Monetary Policy to include all new issuances of government securities with 15-year, 30-year and 40-year tenures. The central bank also removed limits related to short-term investments and individual securities for FPI investments under the general route.