Income Tax Ordinance 2026 for Retrospective Tax Exemption to FPI in G-Sec Investments #economy

0. 📡 👩🏻‍🏫 6th Jun, Saturday, 9PM Night my Next Free Monthly Economy Current Affairs Free Live Class ⛓️‍💥 URL https://unacademy.com/class/mrunals-economy-monthly-current-2026-may-for-upsc-prelims/V9KMKN5V 1. 👨🏻‍🏫🔠 Prelims + Mains 1 year Live Lectures- https://unacademy.com/goal/upsc-civil-services-examination-ias-preparation/KSCGY/subscribe?plan_type=plus&referral_code=mrunal.org 2. 👨🏻‍🏫✍🏻 ₹ 9,999 Batch for Mains Live lectures and MRTS (Mains Revision Test Series with Evaluation) for UPSC Mains 2026: https://unacademy.com/store/batch/quality-enrichment-program-for-upsc-cse-mains-2026-unacademy-mains-revision-test-series-mrts-777/FLVI9ZUV (🔖discount Code: 'Mrunal.org') TIMESTAMPS: 00:00 Intro 00:22 Income Tax Ordinance 01:02 Tax Waiver on Interest Income 02:04 Tax Waiver on Capital Gains 03:01 Why India Is Doing This 04:11 De-dollarization Context 05:25 FPI Investment Limits 06:26 Policy Uncertainty 07:35 Tax Equity 08:19 Essay and Mains Angles DESCRIPTION: Dr. Mrunal Patel | UPSC Educator and Economy Subject Expert June 2025: Parliament not in session, so Government issued a Presidential Ordinance amending the Income Tax Act retrospectively from April 1, 2025. Two tax categories waived for FPIs investing in Government Securities: 1. Income Tax on Interest: FPIs faced up to 20% withholding tax on G-Sec coupon payments. Now fully waived. 2. Capital Gains Tax: FPIs selling G-Secs in secondary market faced 12.5-20% tax on profits. Now fully waived. This exemption applies to FPIs only, NOT resident Indian taxpayers. WHY THIS MOVE: FPIs withdrew Rs 30 lakh crore from Indian markets in 2025 and again in 2026. Each exit converts rupees into dollars, weakening the rupee. To reverse this capital flight, government offered targeted tax relief on G-Secs. FPI INVESTMENT LIMITS: Up to 30% of outstanding Central Government Securities; separate limits for State Government Securities. MAINS AND ESSAY DIMENSIONS: - De-dollarization: India traded in rupees with Iran and Russia but US pressure reversed those deals. Until alternatives solidify, India must attract FPI dollar inflows. - History Repeating: Budget 2019 surcharge on FPI equity profits reversed after capital flight. Vodafone retrospective tax reversed in 2021. Same pattern repeats in 2025-26. Economic Survey demands stable, predictable tax policy. - Tax Inequity: Domestic taxpayers bear full liability and cannot relocate. FPIs get waivers because they can exit. Economic Survey warns this fuels rationalized tax evasion among Indian taxpayers. - Democracy as Contract: Poor public services erode the social contract, increasing non-compliance. Useful for: UPSC CSE, SSC-CGL, State PSC, Banking, IBPS, RBI Grade B, CAPF, CDS, ACIO, APFC ### ALTERNATIVE TITLES: 1. Why India Waived Tax for Foreign Investors on G-Secs | FPI Ordinance 2025 Explained 2. Government Securities FPI Tax Relief and Rupee Stability | UPSC Economy Current Affairs 3. India Rolls Out Red Carpet for FPIs: Tax Waiver on G-Sec Income and Capital Gains ### TAGS: FPI tax exemption, government securities India, FPI ordinance 2025, UPSC economy current affairs, capital gains tax waiver, withholding tax FPI, RBI Grade B economy, rupee dollar exchange rate, foreign portfolio investors India, de-dollarization India, UPSC GS3 economy, mrunal economy, Win26, PCB15, SSC CGL economy, IBPS economy, UPSC prelims economy, India capital flows, economic survey India