3 weeks ago
Lok Sabha passes Taxation and Other Laws Bill without debate
India's lawmakers passed a big new set of rules called the Taxation and Other Laws (Amendment) Bill.
They passed it very quickly, without talking about it first, because some lawmakers were loudly protesting.
The rules are meant to make India a friendly place for businesses from other countries.
One rule lets people who manage big investment funds move to India without their foreign funds being taxed as if the fund runs a business here.
Another rule gives tax breaks for 15 years to companies that bring machines and parts to India to make electronics like phones and laptops.
Foreign diamond miners who sell rough diamonds in special zones in Mumbai and Surat will also not have to pay tax for 15 years.
The rules also let the government decide which electronic payment methods, like paying by phone, must stay free of charges.
The overall idea is to bring more trade, investment, and jobs to India.
The Lok Sabha passed the Taxation and Other Laws (Amendment) Bill, 2026, on Thursday without debate, amid Opposition protests over issues including the alleged theft of donations at the Ram temple in Ayodhya.
The Bill amends the Payment and Settlement Systems Act, 2007, giving the Central Government legal backing to modify the zero-MDR framework for Unified Payments Interface (UPI) and RuPay transactions.
It cuts the conditions to 5 from 13 for an Eligible Investment Fund (EIF) managed from India to claim tax exemption on its global income.
It extends the income tax exemption for foreign companies supplying machinery, components and materials for electronics manufacturing in India to a total of 15 years, into FY 2040-41.
Foreign diamond miners and connected traders get a 15-year full income tax exemption on rough diamond sales in special zones in Mumbai and Surat.
- Who
- The Lok Sabha, the lower house of India's Parliament, presided over by Speaker Om Birla; Finance Ministry officials; and Opposition members including RSP leader N.K. Premachandran
- What
- Passed the Taxation and Other Laws (Amendment) Bill, 2026, by voice vote without debate; the Bill amends the Payment and Settlement Systems Act 2007, the Income-tax Act 2025 and the Finance Act 2026, repeals the June 5 Ordinance on foreign investor tax exemption, and covers UPI/RuPay charges, fund manager relocation, electronics manufacturing and rough diamond sales
- Where
- New Delhi, India, in the Lok Sabha; the Bill's diamond provisions target special zones in Mumbai and Surat
- When
- Thursday, August 6, 2026, during Parliament's Monsoon Session, which began on July 20
- Why
- To attract foreign capital, boost Make in India manufacturing, and improve ease of doing business with clear, stable and predictable tax treatment
Key facts
- Bill
- Taxation and Other Laws (Amendment) Bill, 2026 (ToLA)
- Status
- Passed by voice vote without debate; seventh Bill of the Monsoon Session and fifth passed without debate; Question Hour disrupted for the 14th day
- Laws amended
- Payment and Settlement Systems Act 2007, Income-tax Act 2025, Finance Act 2026; repeals the June 5 Ordinance
- Policy themes
- Attracting Foreign Capital, Make in India, Ease of Doing Business
- EIF conditions
- Reduced from 13 to 5 for funds managed from India
- Manufacturing exemption
- Extended to a total of 15 years, into FY 2040-41, for machinery and components used in electronics manufacturing (e.g., mobile phones, laptops, servers)
- Rough diamond exemption
- 15-year full income tax exemption in Mumbai and Surat special zones
- UPI/RuPay charges
- Central Government may decide by notification which electronic payment modes or transactions must remain free
Quotes
Finance Ministry Official
Official from India's Finance Ministry explaining mandatory condition reduction for investment funds
“"The Bill cuts this list of conditions down sharply, keeping only what is essential to prevent misuse and round tripping of money by Indian residents. A fund manager can now relocate to India without the foreign fund being treated as doing business in India."”
thehindubusinessline.com
Sources
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