Lok Sabha Passes Taxation and Other Laws Amendment Bill,2026

The Lok Sabha passed the Taxation and Other Laws (Amendment) Bill, 2026, on 6 August 2026. The Bill amends the Payment and Settlement Systems Act, 2007, the Income-tax Act, 2025, and the Finance Act, 2026.

Legislative Background

The Bill was introduced by Finance Minister Nirmala Sitharaman. It replaces the Income-tax (Amendment) Ordinance, 2026, which was promulgated on 5 June 2026. The Bill was passed without debate in the Lok Sabha.

Tax Exemptions for Electronics Manufacturing

The Bill extends income tax exemptions until 2040-41 for foreign companies that engage contract manufacturers in India for electronics goods. It also covers foreign companies that store components in customs warehouses for supply to Indian manufacturers.

Digital Payments and Foreign Investment Provisions

The Bill gives legal backing to the Central government to modify the zero-Merchant Discount Rate framework for UPI and RuPay card transactions. It also allows the government to decide which electronic payment modes remain free. The Bill exempts Foreign Institutional Investors and the Bank for International Settlements from income tax on interest and capital gains from investments in government securities from 1 April 2026.

Important Facts for Exams

• The Payment and Settlement Systems Act, 2007, regulates payment systems in India, including electronic fund transfers and card-based payments.
• UPI stands for Unified Payments Interface, and RuPay is an Indian domestic card payment network.
• Merchant Discount Rate, or MDR, is a fee charged to merchants for accepting digital payments.
• The Bank for International Settlements is an international financial institution based in Basel, Switzerland.

Related Constitutional and Fiscal Context

Money Bills in India are governed by Article 110 of the Constitution. Taxation laws and amendments to direct and indirect tax provisions are commonly placed before the Lok Sabha as part of the annual fiscal framework.