Government lists Bill in Parliament to replace Ordinance that exempted FIIs from tax

📌 Summary:

• The government has listed a Bill for the Monsoon Session of Parliament to replace its June 2026 Ordinance, which had exempted foreign institutional investors (FIIs) and the Bank for International Settlements (BIS) from capital gains tax and tax on interest from their investment in government securities
• The President had promulgated the Income-tax (Amendment) Ordinance, 2026 on June 5, since Parliament was not in session and she was ‘‘satisfied that circumstances exist which render it necessary for her to take immediate action’’
• Constitutional context: an Ordinance (Article 123) must be replaced by an Act of Parliament within six weeks of the House reassembling, else it lapses
• Policy rationale: the tax exemption aims to make Indian government securities more attractive to foreign investors, supporting India’s inclusion in global bond indices and deepening the sovereign debt market

🎯 UPSC Relevance: GS3 Economy / GS2 Polity — taxation of foreign investors, ordinance-making power (Article 123), attracting FII/FPI flows into G-secs.

📝 Prelims Facts:

• Ordinances are promulgated under Article 123 (President) when Parliament is not in session; must be laid before Parliament and lapse six weeks after it reassembles
• BIS = Bank for International Settlements (the ‘‘central bank of central banks’’), based in Basel
• The measure concerns capital gains tax and interest tax on government securities (G-secs)

🔑 Key Term: Foreign Institutional Investor (FII) — an investor/fund registered in a country outside the one in which it invests, here in Indian government securities.