Foreign investors seek one-day remittance for G-Secs after tax exemption begins April 2026

Foreign portfolio investors in India are pushing for faster fund transfers after the government announced tax relief for their holdings in government securities. Starting April 1, 2026, the income-tax amendment ordinance completely scrapped withholding taxes on interest earned from G-Secs and eliminated capital gains taxes for profit-making transactions. Previously, secondary market transactions settled on the next business day required custodian banks to wait an additional day before remitting funds outside the country. This delay occurred because banks requested formal letters from accounting firms confirming the tax status of every transaction. Fund representatives argued that since no tax now applies, a single quarterly or annual letter from an accountant should suffice to clear the backlog. During Thursday's meeting with Reserve Bank of India officials, these participants discussed replacing the per-transaction approval process with simplified documentation.