New Delhi, Augus18, 2026: President Droupadi Murmu has given her assent to the Taxation and Other Laws (Amendment) Act, 2026 and the law further amending the Payment and Settlement Systems Act, 2007. Both Bills were passed by Parliament on August 10, 2026, and received Presidential assent on August 17.

The Taxation Act aims to attract foreign investment, promote domestic electronics manufacturing and provide greater certainty to foreign cloud-service companies using Indian data centres. It replaces the June 5 ordinance that provided income-tax exemptions to Foreign Portfolio Investors (FPIs) on interest income and capital gains from investments in Government securities.

The Act also makes it easier for foreign fund managers to relocate to India by reducing conditions relating to taxation of their global income. To promote electronics manufacturing, the income-tax exemption available to foreign companies using contract manufacturers in India has been extended up to 2040-41. The benefit covers products such as mobile

phones, laptops, computers, tablets and servers. Foreign companies storing components in customs warehouses for supply to Indian contract manufacturers will also receive tax exemption for 15 years.

The amendment to the Payment and Settlement Systems Act provides legal backing to modify the zero-MDR framework for UPI and RuPay transactions. However, UPI payments will remain free for consumers, while any future MDR may apply only to specified categories of merchant transactions.