The Central Government, through CBDT Notification No. 136/2026, S.O. 5694(E), dated 19 October 2026, has specified an exemption from tax deduction at source on certain interest payments made by the New Development Bank (NDB) under its Maharajah INR Bond programme.
Under the notification, no deduction is required under section 393(1), Table serial number 5, or section 393(2), Table serial number 17, of the Income-tax Act, 2025, as applicable, on interest paid by NDB to qualifying holders of Maharajah INR Bonds issued during tax year 2026–27 and subsequent tax years. The wording restricts the relief to bonds issued within that specified period; it does not state a general withholding exemption for all NDB bonds, other issuers or other investors.
The notification defines a qualifying holder of Maharajah INR Bonds as either a resident or a Foreign Institutional Investor referred to in section 210(6) of the Income-tax Act, 2025. Bond investors and withholding teams should confirm the holder's status, the bond programme, its issue period and the payment's nature before relying on the exemption.
The relief concerns deduction of tax at source on the specified interest payments. It should not be read, by itself, as a blanket exemption of that interest from the recipient's income-tax liability. The notification also requires NDB to furnish information specified under Schedule VII, Table serial number 49, of the Act and the Income-tax Rules, 2026.
Notification No. 136/2026 comes into force on the date of publication in the Official Gazette, 19 October 2026. Financial institutions, bondholders and advisers should preserve documents evidencing eligibility and follow the applicable NDB information-reporting requirements.