CBDT exempts interest payments on rupee-denominated bonds issued by New Development Bank from TDS
Economic Times 1 hr ago·19 Oct 2026, 4:32 pm
The Central Board of Direct Taxes (CBDT) has announced a significant tax relief for investors holding rupee-denominated bonds issued by the New Development Bank (NDB). The exemption from Tax Deducted at Source (TDS) applies to interest payments made on these bonds, specifically for the 2026-27 fiscal year and subsequent periods. This measure aims to make NDB bonds more attractive by reducing the immediate tax burden on the interest income for eligible holders.
For retail investors and foreign institutional investors, this move is a positive development as it lowers the effective yield on the investment. By removing the TDS hurdle, the bank can offer more competitive pricing, potentially increasing the demand for these instruments in the Indian market. It signals a broader effort to deepen the domestic debt market and integrate it more closely with global financial frameworks.
Investors should monitor the final guidelines from the CBDT and the NDB to understand the exact compliance requirements. While the exemption is welcome, it is crucial to assess how this impacts the overall risk-return profile of the bonds compared to other fixed-income options available in the market.
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