Government tables sweeping tax and payment reforms bill in Parliament

The central government moved the Taxation and Other Laws (Amendment) Bill, 2026 to the Lok Sabha, outlining a suite of reforms designed to attract investment, support manufacturing and increase tax predictability. The proposal streamlines the Income-tax Act of 2025 by cutting compliance requirements while preserving key safeguards, with the aim of fostering fund-management activity in India. It prolongs the tax holiday for foreign firms providing capital goods to Indian electronics contract manufacturers to the fiscal year ending March 31, 2041, and expands the list of qualifying electronic goods to cover laptops, tablets, servers, hearables, wearables and related accessories.

Business trusts gain relief through the removal of a rule that barred tax-free dividends when the special purpose vehicle opted for the new tax regime. Amendments to the Payment and Settlement Systems Act of 2007 strip references to the Income-tax Act and empower the government to designate electronic payment methods on which banks or providers cannot levy fees. The bill also repeals the Income-tax (Amendment) Ordinance, 2026, while confirming the legality of actions already taken under that ordinance.