PNB Gilts Share Price Jumps Up To 10%; Here's Why

On Friday, Indian equity benchmarks traded higher, with the benchmark Nifty 50 index rising 0.06 per cent to 23,430.40. Amid the positive market sentiment, PNB Gilts share price jumps 10.36 per cent to Rs 99.13 on 10:00 AM after attracting investor attention following policy measures aimed at increasing foreign participation in India's government bond market.

Why PNB Gilts Is In Focus

PNB Gilts is one of India's leading primary dealers in government securities and derives a significant portion of its business from trading, distribution and market-making activities in sovereign debt instruments.

Market participants expect that the Tax exemptions and relaxation of investment restrictions could attract higher foreign investment into government bonds, resulting in improved liquidity and increased trading activity in the debt market. Higher transaction volumes and stronger participation from institutional investors are generally viewed as positive for primary dealers such as PNB Gilts.

Government Announces Tax Exemptions For Foreign Investors

The Government has promulgated an ordinance amending Schedule IV of the Income-tax Act, 2025, by introducing two new categories that provide tax exemptions on specified government securities investments.

Under the revised provisions, interest income earned on eligible government securities and capital gains arising from their sale, exchange or transfer will be exempt from income tax for eligible foreign investors. Additionally, no withholding tax will apply to such investments.

The benefits have been extended to Foreign Institutional Investors (FIIs) and the Bank for International Settlements (BIS), subject to prescribed disclosure requirements. The amendments have been made effective retrospectively from April 1, 2026.

Government Eliminates Capital Gains And Interest Tax For Eligible Foreign Investors

A key highlight of the ordinance is the significant tax relief extended to eligible foreign investors in government securities. Under the previous tax structure, long-term capital gains (LTCG) on government securities were taxed at 12.5 per cent, while interest income attracted a withholding tax of 20 per cent. 

Following the amendment, both these tax burdens have effectively been removed for eligible entities, with long-term capital gains tax reduced to 0 per cent and withholding tax on interest income also reduced to 0 per cent. 

About PNB Gilts 

PNB Gilts Ltd is promoted by Punjab National Bank and operates as a primary dealer in government securities. The company actively participates in primary auctions conducted by the Reserve Bank of India and facilitates trading across government bonds, treasury bills, state development loans and other fixed-income instruments.

Its performance is closely linked to developments in India's debt markets, interest rate movements and investor participation in government securities.

What are your views on the government's latest measures to attract foreign investment into India's bond market? Share your thoughts in the comments below.
Disclaimer: The article is for informational purposes only and not investment advice.