Maharajah Bonds gain investor appeal with TDS exemption

In a notification dated October 19, the Central Board of Direct Taxes (CBDT) said no tax would be deducted at source on interest paid to eligible bondholders during financial year 2026-27 and subsequent tax years. The exemption covers residents and foreign institutional investors.

In a notification dated October 19, the Central Board of Direct Taxes (CBDT) said no tax would be deducted at source on interest paid to eligible bondholders during financial year 2026-27 and subsequent tax years. The exemption covers residents and foreign institutional investors.

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The notification follows an August disclosure by the Insurance Regulatory and Development Authority of India (Irdai) that it had received a representation from NDB seeking permission for insurers to invest in Maharajah Bonds. The bank plans to deploy the proceeds for general corporate purposes, including financing or onward lending to sustainable infrastructure, green and social projects in India.

The move comes as NDB seeks to mobilise rupee-denominated funding for development financing in India, with potential access to domestic institutional investors, including insurers, subject to applicable investment regulations.

The bank plans to raise ₹25,000 crore through Maharajah Bonds over five years to fund eligible infrastructure projects.