LS passes taxation bill:Govt aims to attract foreign capital, promote domestic electronic manufacturing

The Lok Sabha on Thursday passed the Taxation and other Laws (Amendment) Bill without a debate due to persistent sloganeering by the Opposition over various issues, including alleged theft of donation at the Ram temple in Ayodhya. After the passage of the bill, through which the government also amended the Payment and Settlement Systems Act, 2007, the House was adjourned for the day. Through the Bill the government aims to achieve following goals: The Bill also proposes to remove the linkage between the Payment and Settlement Systems Act and the Income Tax Act. According to news agency PTI, the Bill also proposes to give a legal backing to the government to modify the zero-MDR framework on UPI and RuPay card transactions. Currently, banks and payment-system providers cannot directly or indirectly charge users for payment made through UPI and RuPay debit cards. The Bill proposes allowing the Central government to decide, through notification, which electronic payment modes or transactions must remain free. The Taxation and other Laws (Amendment) Bill, 2026, replaces the June 5 ordinance that provided I-T exemption to income from interest income and capital gains made by FPIs from investments in G-Secs. The Bill proposes to make it easier for fund managers to relocate to India but 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. Bill proposes tax exemption to foreign companies for manufacturing Made In India electronics To encourage domestic manufacturing by giving policy certainty, the Bill 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. List of electronics, production of which companies will pay no tax: Specified electronic items mentioned in the bill include mobile phones, laptops, personal computers, tablets, servers and their key parts and accessories on which manufacturers will be required to pay no tax till 2040-41. To support component supply for electronics factories, the Bill 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. Foreign Cos won’t require GoI’s permission to operate data centres in India The Bill also removes the approval and notification requirements for foreign cloud companies that use Indian data centres. It also proposes that Indian data centres be run on a leased basis rather than only under direct ownership.