The RBI has granted permission to the Indian corporate to issue rupee denominated bonds outside India. A press released issued by the Finance Ministry said, the matter of taxation of income from such bonds under Income-tax Act has been considered by the Government. The government also clarified that the taxation of interest income from these INR off-shore bonds in the case of non-resident investors is 5 percent, which is in the nature of final tax and it would be applicable in the same way as it is applicable for off-shore dollar denominated bond. The government also decided the Capital gains, arising in case of appreciation of rupee between the date of Issue and the date of redemption against the foreign currency in which the investment is made, would be exempted from capital gains tax.