NEW DELHI, June 5 (Reuters) - India announced on Friday it would exempt foreign institutional investors and the Bank for International Settlements from capital gains tax on receipts arising from interest or sale of government securities.

The decision, announced in a government statement, is aimed at attracting more stable foreign capital as the rupee has weakened over 5% this year amid elevated oil prices and equity outflows.

Foreign investors are subject to a 12.5% long-term capital gains tax on listed shares and bonds held for more than 12 months, and a 20% withholding tax on interest earned from government bonds.

(Reporting by Manoj Kumar; Editing by Muralikumar Anantharaman)