The Taxation and Other Laws (Amendment) Act, 2026 is a legislative act of the Indian Parliament that amends multiple existing laws, primarily the Income-tax Act, 2025, and the Payment and Settlement Systems Act, 2007. It received the President's assent on August 17, 2026, after being passed by Parliament on August 10, 2026. The Act's core purpose is to attract foreign capital, promote domestic electronics manufacturing, and provide greater tax and process certainty.
The Act originated to replace the Income-tax (Amendment) Ordinance, 2026, which was issued on June 5, 2026. A key mechanism of the Act is providing income tax exemptions to certain entities. For instance, it exempts Foreign Portfolio Investors (FPIs) and the Bank for International Settlements (BIS) from income tax on interest and capital gains from investments in Government Securities (G-Secs), effective from April 1, 2026. To boost the "Make in India" initiative, the Act extends the income tax exemption for foreign companies supplying capital goods to Indian contract manufacturers of specified electronic goods until the tax year 2040-41.
The "Other Laws" component connects the Act to the Payment and Settlement Systems Act, 2007, by giving the Central Government legal backing to modify the zero-Merchant Discount Rate (MDR) framework on UPI and RuPay card transactions. This amendment allows the government to decide, via notification, which electronic payment modes will remain free from MDR charges. The Act also simplifies conditions for fund managers to relocate to India by cutting down on the list of requirements for offshore funds to avoid being taxed on their global income.