The Taxation and Other Laws (Amendment) Bill, 2026, replaces the June 5 ordinance that provided I-T exemption to interest income and capital gains made by FPIs from investments in G-Secs.. Image by magnific
President Droupadi Murmu has given her assent to the Taxation and Other Laws (Amendment) Act, 2026, and another law to amend the Payment and Settlement Systems Act of 2007.
The bills were passed by Parliament on August 10.
The Taxation and Other Laws (Amendment) Act, 2026, and an Act to further amend the Payment and Settlement Systems Act, 2007, have received the assent of the President on the August 17, 2026, the Ministry of Law said in a gazette notification.
Through the taxation Act, the government seeks to attract more foreign capital, promote domestic electronics manufacturing and make it easier for foreign cloud companies to use Indian data centres by providing “process certainty”.
The amendment to the Payment and Settlement Systems Act, 2007, gives a legal backing to the government to modify the zero-MDR framework on UPI and RuPay card transactions. The government can now decide, via notification, which electronic payment modes or transactions would remain free from MDR charges.
LISTEN: MDR charges on UPI transactions: Necessity or revenue grab? | In Focus Podcast
At present, banks and payment-system providers cannot charge users for payment made through UPI and RuPay debit cards.
The UPI and Services Steering Committee headed by NPCI, will now decide on the MDR charges.
While replying to the discussion of the Bill, Finance Minister Nirmala Sitharaman had said UPI payments will remain free for consumers, and any future merchant discount rate (MDR) will apply only to certain categories of merchant transactions.
The Taxation and Other Laws (Amendment) Bill, 2026, replaces the June 5 ordinance that provided I-T exemption to interest income and capital gains made by FPIs from investments in G-Secs.
The Act makes it easier for fund managers to relocate to India by cutting down on the list of conditions that these funds will have to satisfy to ensure that their global income does not get taxed in India.
To encourage domestic manufacturing by giving policy certainty, the Act extends till 2040-41 the income tax exemption currently available to foreign companies that engage a contract manufacturer in India for producing electronics goods here.
Specified electronic items mentioned in the Act include mobile phones, laptops, personal computers, tablets, servers and their key parts and accessories.
To support component supply for electronics factories, it proposes I-T exemption for 15 years till 2040-41 to foreign companies that store components in customs warehouses to further supply them to a contract manufacturer in India.
Published – August 18, 2026 03:26 pm IST
