Parliament passes Taxation and Other Laws Amendment Bill to enhance ease of doing business
New Delhi, August 10
Parliament has passed the Taxation and Other Laws Amendment Bill 2026 today with Rajya Sabha returning it to Lok Sabha after discussion. Lok Sabha has already passed the Bill. Union Finance Minister Nirmala Sitharaman moved the bill.
The Bill seeks to amend the Payment and Settlement Systems Act, 2007, the Income-tax Act, 2025, and the Finance Act, 2026. The bill will replace the Income-tax (Amendment) Ordinance, 2026, which was promulgated on 5th June this year. The Ordinance was promulgated with the objective of mitigating the impact of external economic shocks, ensuring stability in the domestic economy and supporting key sectors affected by the prevailing global conditions by amending certain provisions of the Act.
The Bill further exempts foreign institutional investors and the Bank for International Settlements from paying income tax on interest earned on investments in government securities. The exemption will apply to income arising on or after 1st April this year. Previously, under the Income-tax Act, interest income was taxed at 20 per cent, short-term capital gains at 30 per cent and long-term capital gains at 12.5 per cent. The Bill further amends the Income-tax Act to exempt income earned by certain foreign companies from the sale of rough diamonds in a notified special zone.
Replying to the discussion, Union Finance Minister Nirmala Sitharaman said that the objective of the Bill is to strengthen India’s manufacturing ecosystem, attract further investment, generate employment, and promote manufacturing activities. She said the second major reform relates to providing tax exemptions to foreign companies procuring data services from specified data centres in India. Ms Sitharaman noted that the measure will enhance ease of doing business for global cloud service providers, expand India’s data centre ecosystem, and support the development of AI-driven data cities. She informed that these reforms will significantly benefit Indian companies as existing data centers will expand their operations.
The Minister clarified that the Bill does not impose any tax or transaction charge on UPI users. Ms Sitharaman said that the electronic payment modes will continue to receive statutory protection against charges. The Minister said no Merchant Discount Rate, MDR framework has been finalized. She assured that small merchants and consumers will not have to pay MDR charges on UPI.
The Finance Minister said this amendment is also aimed at attracting global diamond trading activities. It is also intended to promote a comprehensive ecosystem for financing, buying, and selling of diamonds within the country. Ms Sitharaman said that with the proposed tax exemptions, these global players can establish wholesale trading operations in India, making them more accessible to Indian buyers. She informed that the broader objective is to bring the entire value chain of the diamond trade to India.
Earlier, participating in the discussion, Tarun Chugh of BJP supported the Bill saying it will support the progress of the nation, both locally as well as globally. He said that the Bill will give a significant boost to the nation’s economy and further strengthen the vision of Aatmanirbhar Bharat.
P Wilson of DMK expressed concern that certain provisions in the Bill are going to affect the poor, the middle class and the common man.
AAP’s Sanjay Singh claimed that the Bill will affect small vendors by levying tax on small transactions. Several other members also participated in the discussion.
After that, the Rajya Sabha took up Special Mentions with members raising issues of urgent public importance. The Presiding Officer adjourned the House for the day after completing business