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What is the story about?
Investment made by Foreign Institutional Investors (FIIs) in government securities (G-Secs) is likely to be exempt from all taxes, sources in the know told CNBC-TV18, on Thursday, June 4.
The news has also been reported by multiple other news outlets.
According to the sources, the government is likely to bring an ordinance to implement this decision.
Currently, there is a 20% withholding tax, and a 12.5% capital gains tax that is levied on FIIs holding G-Secs.
Foreign Institutional Selling in the Indian markets has already crossed ₹2.2 lakh crore so far in 2026 in just the first five months of the year.
The inclusion of 23 Indian government bonds within the JPMorgan GBI-EM Global Diversified index began in June 2024, with a staggered addition to reach the 10% limit.
Only Indian government bonds that are designated under the Fully Accessible Route (FAR) by the Reserve Bank of India (RBI) are eligible for these global indices.
Bloomberg has officially deferred the inclusion of Indian bonds in its flagship Bloomberg Global Aggregate Index.
PNB Gilts is a designated Primary Dealer (PD) by the Reserve Bank of India. Their entire business is centered around the buying and selling of G-Secs, treasuries, and corporate bonds.
When PNB Gilts builds up its own investment portfolio of bonds, it will earn interest income via coupon payments that is both steady as well as predictable.
For ensuring that the bond issuances hit the market successfully, PNB Gilts charges the issuers a commission. In case of higher bond supply and investor appetite, the fee pool for the company will directly increase in proportion.
A bigger and more liquid bond market also helps the company enter or exit large positions, without causing any sharp swings in these trades on either side.
Shares of PNB Gilts gained as much as 9% after the news break before cooling off from the highs. The stock is currently trading 5% higher at ₹90.36.
The stock had gained over 15% on May 14 as well, when the story was first reported by Bloomberg.
The news has also been reported by multiple other news outlets.
According to the sources, the government is likely to bring an ordinance to implement this decision.
Currently, there is a 20% withholding tax, and a 12.5% capital gains tax that is levied on FIIs holding G-Secs.
Foreign Institutional Selling in the Indian markets has already crossed ₹2.2 lakh crore so far in 2026 in just the first five months of the year.
India & The Global Bond Markets
The inclusion of 23 Indian government bonds within the JPMorgan GBI-EM Global Diversified index began in June 2024, with a staggered addition to reach the 10% limit.
Only Indian government bonds that are designated under the Fully Accessible Route (FAR) by the Reserve Bank of India (RBI) are eligible for these global indices.
Bloomberg has officially deferred the inclusion of Indian bonds in its flagship Bloomberg Global Aggregate Index.
How PNB Gilts Benefits From Such A Move?
PNB Gilts is a designated Primary Dealer (PD) by the Reserve Bank of India. Their entire business is centered around the buying and selling of G-Secs, treasuries, and corporate bonds.
When PNB Gilts builds up its own investment portfolio of bonds, it will earn interest income via coupon payments that is both steady as well as predictable.
For ensuring that the bond issuances hit the market successfully, PNB Gilts charges the issuers a commission. In case of higher bond supply and investor appetite, the fee pool for the company will directly increase in proportion.
A bigger and more liquid bond market also helps the company enter or exit large positions, without causing any sharp swings in these trades on either side.
Shares of PNB Gilts gained as much as 9% after the news break before cooling off from the highs. The stock is currently trading 5% higher at ₹90.36.
The stock had gained over 15% on May 14 as well, when the story was first reported by Bloomberg.
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