The Lok Sabha has passed the Taxation and Other Laws (Amendment) Bill, 2026, with the government aiming to attract more foreign investment, boost manufacturing and make India a more attractive destination for global companies.
The Bill was passed on August 6, 2026, and replaces the Income-tax (Amendment) Ordinance, 2026, issued earlier this year.
It makes changes to the Income-tax Act, 2025, Finance Act, 2026 and Payment and Settlement Systems Act, 2007.
The government says the changes are aimed at providing greater tax certainty, reducing compliance burdens and strengthening India’s position in global supply chains.
Electronics Manufacturing Gets Tax Benefits Until 2041
One of the biggest changes is related to India’s electronics manufacturing sector.
Tax benefits available to foreign companies supplying capital goods, equipment and tools to Indian contract manufacturers of specified electronic products have been extended.
Earlier, these benefits were available until 2030-31.
The new legislation extends them until March 31, 2041.
The Bill also clearly lists the electronic products covered under the exemption.
These include:
Mobile phones
Laptops
Tablets
Personal computers
Servers
Hearables
Wearables
Related parts and accessories
The longer tax benefit period is expected to encourage companies to make larger and longer-term investments in India’s electronics manufacturing industry.
15-Year Tax Exemption for Certain Electronics Warehouses
The Bill also introduces a 15-year tax exemption for certain foreign companies that store electronic components in customs-bonded warehouses before supplying them to Indian manufacturers.
The government expects this measure to strengthen the supply chain supporting electronics manufacturing.
It could also give overseas companies more confidence to establish long-term operations connected with India’s growing electronics industry.
Global Investment Funds Get More Flexibility
The new legislation also focuses on making India more attractive to global investment funds and fund managers.
Earlier, overseas investment funds managed from India had to meet several conditions related to factors such as the number of investors, fund size, investment concentration and individual investor participation.
The Bill seeks to rationalise these requirements while continuing safeguards against misuse and round-tripping of funds.
The government expects the changes to encourage more global fund managers to shift their operations to India.
This could also support the growth of high-value financial services and create more skilled employment opportunities.
Tax Exemption for Certain Foreign Portfolio Investors
Another important provision concerns eligible Foreign Portfolio Investors (FPIs) and the Bank for International Settlements (BIS).
Under the amendments, eligible FPIs and BIS can receive tax exemptions on certain interest income and capital gains earned from Indian government securities.
However, these exemptions will remain subject to the required reporting conditions.
What Does the New Tax Bill Aim to Achieve?
Overall, the Taxation and Other Laws (Amendment) Bill, 2026 combines tax incentives with regulatory simplification.
The government hopes the measures will attract more foreign direct investment, encourage long-term manufacturing projects and reduce the compliance burden for businesses.
The focus on electronics could also help India expand its role in global supply chains, while changes for investment funds and foreign investors are aimed at making the country more competitive for international capital.
