Centre moves Taxation and Other Laws (Amendment) Bill, proposes major reforms

The Central government on Tuesday introduced the Taxation and Other Laws (Amendment) Bill, 2026 in the Lok Sabha, proposing a series of tax reforms aimed at boosting investment, supporting manufacturing, providing greater tax certainty and replacing the Income-tax (Amendment) Ordinance, 2026.The Bill aims to simplify the framework under the Income-tax Act, 2025 by reducing compliance requirements while retaining essential safeguards, with the objective of promoting fund management activity in India and providing greater tax certainty to global investors, ANI cites.The government said the proposed amendments come against the backdrop of evolving geopolitical developments and disruptions in global trade and supply chains.Electronics manufacturing gets extended tax incentivesThe Bill also proposes to extend tax incentives for electronics manufacturing. It seeks to continue the tax exemption available to foreign companies supplying capital goods, equipment or tooling to Indian contract manufacturers of specified electronic goods until the tax year ending March 31, 2041, instead of the earlier sunset date of 2030-31.The scope of the incentive is also proposed to be widened by expanding the definition of specified electronic goods to include laptops, tablets, servers, hearables, wearables and related accessories.The proposed legislation also provides relief for business trusts by removing the existing restriction that denied tax exemption on dividends received by unit holders where the special purpose vehicle (SPV) had opted for the new tax regime.Amendments to digital payment lawApart from taxation changes, the Bill proposes amendments to the Payment and Settlement Systems Act, 2007 by removing references to the Income-tax Act in provisions relating to electronic payment modes. It also empowers the Central government to notify electronic payment modes on which banks or payment system providers will not be allowed to levy charges.The Bill seeks to repeal the Income-tax (Amendment) Ordinance, 2026, while validating all actions already taken under it. The government said the legislation will replace the Ordinance through an Act of Parliament and incorporate additional taxation measures considered necessary after stakeholder consultations following the Finance Act, 2026.Get the latest Business News and Live updates. Download the TOI app.