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Govt Scraps FII Capital Gains & Withholding Tax on Bonds to Attract Funds, RBI Trims FY27 GDP Forecast to 6.6%

EconomyEnvironmentPolityCORE
Target:UPSC GS-IIIMPSCBankingSSC GATeachingPrelims HighMains HighStatic GK Link
06 Jun 2026
~2 min
Source: Indian Express
Key Data:FII Tax: LTCG 12.5%, STCG 30%GDP Forecast FY27: 6.6%Nilgiri Tahr Population: 1,364FII G-Sec Investment: ₹3.75 L CrForex Reserves: $709.75 BnBoP Deficit Est: $60 Bn
Bodies:RBIMPCCAQM
Practice MCQs from today's news ▸
What This Article Covers

1.The Centre scrapped long-term (12.5%) and short-term (30%) capital gains tax and withholding tax (~20%) on interest income for Foreign Institutional Investors (FIIs) investing in government bonds to attract foreign funds and stabilize the rupee.

2.The RBI reduced its GDP growth forecast for FY27 to 6.6% from 6.9% and raised the inflation projection to 5.1% from 4.6%, citing global supply constraints and energy prices.

3.Tamil Nadu's Nilgiri Tahr population rose 4.68% to 1,364 individuals, and the Cabinet approved a clean mobility scheme to replace old trucks and buses in Delhi-NCR with BS-VI vehicles to curb pollution.

The Big Picture
Prelims · HighMains · High

The government announced major fiscal measures to attract foreign capital by scrapping all taxes on FII investment in government bonds, aiming to bridge a potential $60 billion Balance of Payments deficit. Simultaneously, the RBI cut the FY27 GDP growth forecast to 6.6%, reflecting global economic headwinds. The news also covers Nilgiri Tahr conservation and a new scheme to replace old vehicles in the NCR.

Exam Lens

Quick Exam Facts From News

FII Tax Rates ScrappedLTCG: 12.5%, STCG: 30%, Withholding Tax: ~20%
RBI GDP Forecast FY276.6% (down from 6.9%)
Nilgiri Tahr Population 20261,364 (4.68% rise over 2025)
FII Investment in G-Secs₹3.75 lakh crore (3.34% of available ₹112.42 lakh crore)
Forex Reserves (Mar 13, 2026)$709.75 billion

1-Minute Revision

  • ›FII Tax Rates Scrapped: LTCG: 12.5%, STCG: 30%, Withholding Tax: ~20%
  • ›RBI GDP Forecast FY27: 6.6% (down from 6.9%)
  • ›Target this Data: FII investment in government bonds is ₹3.75 lakh crore (3.34% of available ₹112.42 lakh crore).
  • ›Target this Nodal Body: The Monetary Policy Committee (MPC) of the RBI, constituted under Section 45ZB of the RBI Act, 1934.
  • ›Target this Legal Point: Nilgiri Tahr is accorded the highest protection under Schedule I of the Wildlife Protection Act, 1972.

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Q1Static LinkageEasy

Under which section of the RBI Act, 1934, is the Monetary Policy Committee (MPC) constituted?

Q2Statement-basedHard

Consider the following statements regarding the recent economic developments:

1. The government has scrapped both long-term and short-term capital gains tax for Foreign Institutional Investors (FIIs) on investments in government bonds.

2. The Reserve Bank of India has increased its GDP growth forecast for the financial year 2026-27 to 7.2%.

3. The Balance of Payments deficit for India is estimated to potentially touch $60 billion in the year 2026-27.

Which of the statements given above is/are correct?

Q3Data-centricMedium

As per the third synchronised population estimation in April 2026, what is the estimated population of the Nilgiri Tahr in Tamil Nadu?

Q4Application/ImpactMedium

What is the primary objective of the clean mobility scheme recently approved by the Union Cabinet for Delhi-NCR?

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