The Central Board of Direct Taxes (CBDT) has exempted interest paid by the New Development Bank (NDB) on its Maharajah INR Bonds from tax deducted at source, according to a Corplawupdates summary of Notification No. 136/2026, dated 19 October 2026. The notification was issued under Section 400(1) of the Income-tax Act, 2025. Spectate Media has not seen the Gazette text.
What the exemption covers
Payers need not deduct tax on the interest under Section 393(1) for resident payees, or under Section 393(2) for non-resident payees who are foreign institutional investors as defined in Section 210(6). The exemption applies only to bonds issued in the 2026-27 tax year and later. NDB must furnish information under Schedule VII of the Act. The summary stresses that this is a TDS exemption, not an income-tax exemption, so the interest remains taxable and must be reported.
The bonds
Maharajah bonds are rupee bonds issued and settled in India. TaxGuru reports that the Insurance Regulatory and Development Authority of India (IRDAI) allowed insurers on 27 August 2026 to treat NDB's bonds as approved investments, and that NDB plans to raise ₹25,000 crore over five years. Public issues need approval from SEBI, and insurers must follow Section 27E of the Insurance Act. The sources give no coupon, tenor, rating or first issue date, and the notification states no amount.
Key numbers
- Notification: 136/2026 (Dated 19 October 2026)
- Planned programme: ₹25,000 crore (Over five years, per TaxGuru)
- Eligible payees: Residents and FIIs (Others are outside the notification)
- Bonds covered: 2026-27 onward (Issued from that tax year)
What boards and CFOs should note
Three points stand out. First, treasuries at insurers and funds can hold the bonds without TDS being deducted, but still need to report the interest. Second, only residents and foreign institutional investors are covered. Third, the terms of the first issue have not been published in these sources.
Source: Corplawupdates, CBDT Notification 136/2026. This is a summary of a news report, published as general information. It is not legal, tax or investment advice.
This article is journalism and commentary. It is not a recommendation to buy or sell any security, and it is not professional advice. Read the full disclaimer.
