India Tax Agency Issues Notification on Amendments to Income Tax Exemption for Specific Financial Instruments

The Indian Central Board of Direct Taxes July 28 issued Notification No. 126/2025, on amendments to the exemption for nonresident income from specific financial instruments under the Income Tax Rules, 1962. The notification includes measures: 1) expanding the scope of relevant financial instruments and entities to include over-the-counter derivatives; 2) expanding the exemption to apply to Foreign Portfolio Investors (FPIs) operating as units within International Financial Services Centers (IFSCs) and recognizing FPIs in addition to offshore banking units; and 3) defining FPIs as investors registered under the Securities and Exchange Board of India. The rules enter into force upon publication ...