FPI Inflows into FAR Bonds Increase by ₹8,794.743 Crore Following Government Tax Relief

Foreign Portfolio Investors (FPIs) have invested ₹8,794.74 crore in government securities under the Fully Accessible Route (FAR) after the government announced tax exemptions for eligible investments, as per a PTI news report.  

According to data from the Clearing Corporation of India Ltd (CCIL), total FPI holdings under the route stood at ₹3.32 lakh crore on Tuesday, compared with ₹3.23 lakh crore on June 3, 2026. 

Tax Exemption Comes into Effect 

The Centre issued an ordinance on June 5 amending the Income Tax Act to exempt interest income and capital gains earned by FPIs from specified government securities.  

The exemption applies retrospectively from April 1, 2025, and covers gains arising from the sale, exchange, or transfer of these bonds. 

Earlier, interest earned on government securities attracted a 20% withholding tax, while listed bonds held for more than 12 months were subject to a 12.5% long-term capital gains tax for foreign investors. 

RBI Expands Eligible Securities 

Alongside the tax changes, the Reserve Bank of India expanded the list of securities available under the FAR framework by including all fresh issuances of 15-year, 30-year and 40-year government securities.  

The central bank also removed limits related to short-term investments, concentration, and individual security exposure under the general investment route for FPIs. 

The FAR mechanism allows non-resident investors to invest in notified Government of India dated securities without any investment ceiling. 

Read More: Fitch Revises India's FY27 GDP Growth Forecast to 6.4% as Energy Costs Rise! 

Conclusion 

The latest rise in FPI holdings under the FAR category follows the tax changes and the RBI's regulatory measures announced earlier this month.  

The changes have widened the range of eligible government securities and altered the tax treatment applicable to foreign investors participating in the domestic bond market. 

For daily market updates and regular stock market news in Hindi, stay tuned to Angel One's share market news in Hindi. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.   
 
Investments in the securities market are subject to market risks, read all the related documents carefully before investing.