As part of amendments to the Finance Bill 2013, outgoing Finance Minister P Chidambaram had then said that 5 percent tax rate would apply to interest payments to FIIs and qualified foreign investors between June 1, 2013 and May 31, 2015 on government securities and rupee-denominated corporate bonds.

The FII investment limit in corporate debt is $51 billion and till now only 33.7 percent has been utilised, leaving enough headroom for FIIs to invest.

On deepening the currency derivative market, the official said the finance ministry is engaged with the Reserve Bank, and a final decision would only be taken by the RBI.

"We want to open up currency derivative market for both domestic and foreign players. Also we want to make it easier for FIIs to take position in the market," the official said.

In its monetary policy statement for 2014-15 on April 1, the RBI had said it was finalising the modalities for allowing FIIs to hedge their currency risk by using exchange traded currency futures.

The central bank also proposed to allow resident individuals, firms and companies with actual foreign exchange exposures to book foreign exchange derivative contracts up to $250,000 on declaration, subject to certain conditions.