Govt to exempt offshore rupee bonds from capital gains for FX gains

Says 5% withholding tax will continue on 'masala' bonds

Indian companies will be exempt from paying capital gains taxes for their rupee-denominated bonds sold abroad in case of rupee appreciation, the government said in an emailed statement on Thursday.

The government also clarified a reduced 5% withholding tax will continue to be applied on these so-called "masala" bonds.

India had cut the tax for debt investments to the current rate from 20% in 2013, although there had been some confusion about whether that also applied for rupee debt issued abroad.