Most mornings my job is comparing prices — this gadget versus that one, the deal versus the wait. This week I spent mine on something rarer: three tax announcements from India, and what they’re actually worth if you’re an NRI or a foreign investor. One of them comes with a hard deadline. I’ll get there.
The honest version first: two of these three are aimed at big institutions, not you. One — the NRI deposit rate — is aimed squarely at you, and the window closes on 30 September 2026. If that’s you, read on. If not, the rest is useful context for why Indian markets keep making headlines.
1. Government bonds: tax-free returns — for the big funds
This is the one making noise. Until now, a foreign fund that bought Indian government bonds paid two taxes: a 12.5% long-term capital gains tax when it sold, plus a 20% withholding tax on the interest. The Income Tax (Amendment) Ordinance, issued on 5 June 2026, brings both to zero — and it runs retrospectively from 1 April 2026, so money already in this financial year gets the benefit too.
The government’s reasoning is simple: most comparable countries don’t tax foreign investors on their government debt, and India did. Now it’s selling its bonds to the world with the old tax as the discount, and it’s widened the shelf, adding 15-, 30-, and 40-year bonds plus Sovereign Green Bonds. For context, the 10-year yield is hovering around 6.80–6.90%, with longer papers nearer 7.50%.
Translation: this is aimed at pension funds, insurers, and sovereign wealth funds. If you’re an individual, you’re watching the ripple, not the wave. Still, it’s worth knowing — you can read more about the move at Reuters.
2. Stock market: the door gets wider, and the ceiling doubles
The second door is the one that touches individual investors. NRIs have long bought Indian stocks through a Portfolio Investment Scheme (PIS) account. The RBI has now extended PIS beyond NRIs and OCIs to all persons resident outside India — including foreign nationals.
And the limits doubled with it:
- What one foreign individual can hold in a single company: 5% → 10%.
- What all such foreign individuals can hold combined in a single company: 10% → 24%.
The RBI’s stated goal is a wider, more stable foreign investor base in Indian equities — plus fresh dollars coming in with each purchase. If you’ve ever wanted direct access to Indian stocks, this is the closest the market has been to opening it up. The details on the PIS expansion are covered at CNBC.
3. FCNR deposits: the one with a deadline
Now the one that matters if you’re an NRI. An FCNR (Foreign Currency Non-Resident) deposit lets you hold a fixed deposit in India in dollars, pounds, or euros — never converted to rupees. Because the money stays in its original currency, a falling rupee can’t touch it. Interest is tax-free for eligible NRIs, and both principal and interest can be remitted home freely.
Here’s what changed, and why it matters. Banks normally hedge their currency exposure, which costs around 3 to 3.5% a year — and that cost is what kept FCNR rates stuck near 4%. The RBI is now absorbing that cost through a special swap facility: it takes the bank’s dollars and promises to return them later at the same exchange rate. With that cost gone, banks can offer NRIs close to 7% on dollar deposits.
The fine print: fresh FCNR deposits of three to five years, USD only, and the window is open until 30 September 2026. If you’ve been waiting on a safe, no-currency-risk place to park dollars, this is it — and it’s one of the few genuinely time-limited opportunities in this whole batch of announcements.
FAQ
Do I need to be an NRI to benefit from any of this? The FCNR deposits are the NRI-specific one. The bond tax break is for big foreign funds, and the PIS changes benefit any person resident outside India — including foreign nationals.
When does the FCNR window close? 30 September 2026. It applies to fresh three- to five-year USD deposits only.
Does any of this help if I live in India? Mostly indirectly. If the measures attract foreign money, a steadier rupee and healthier markets are good news for resident investors too — but none of the three is a direct benefit.
Is the bond tax exemption permanent? It was issued as an ordinance on 5 June 2026 and runs retrospectively from 1 April 2026. It’s a policy decision, not a locked-in statute — worth keeping an eye on.
A note from Dana
Three doors, three different buyers — and only one of them has a calendar date attached. If you’re an NRI with dollars to park, the FCNR rate is the one to act on before 30 September 2026. If not, keep this bookmarked; the PIS and bond moves will shape Indian markets for years to come.