India has removed withholding on interest from the New Development Bank’s planned Maharajah INR Bonds for eligible investors, allowing specified payments to be made without tax deducted at source.
The Central Board of Direct Taxes (CBDT) published the measure on Oct. 19. It covers interest on bonds issued in the 2026-27 tax year and later when paid to resident holders or foreign institutional investors. The bank must provide information required under India’s tax rules.
The change concerns tax collection when interest is paid. The notification does not declare the interest income itself tax-free. Its terms are limited to the specified bonds and eligible holders.
The measure comes as the New Development Bank pursues rupee funding for Indian infrastructure. In March, the bank outlined a plan to raise about INR 250 billion over five years through local-currency bonds. Borrowing in the currency used by the projects would reduce their exposure to exchange-rate movements, the bank said.
Local-currency financing had played a small role in the bank’s India portfolio. Its 2024 evaluation found that only one project in that portfolio had used it at the time. The planned bond program would give the bank a way to raise rupees for projects in India.
Brazil, Russia, India, China and South Africa established the New Development Bank in 2015 to finance infrastructure and sustainable development. New Development Bank Vice President and Chief Operating Officer Roman Serov described the local-currency bonds as upcoming in August and said regulatory support was important to building demand for them.
