Centre unveils tax reforms to attract global capital
New Delhi: Finance Minister Nirmala Sitharaman on Tuesday introduced the Taxation and Other Laws (Amendment) Bill, 2026 in the Lok Sabha, seeking to attract more foreign capital, promote domestic manufacturing and provide greater policy and tax certainty to global businesses.
The Bill proposes easier rules for global investment funds to bring fund managers to India without the foreign fund being treated as doing business in the country. It reduces the number of eligibility conditions, retaining only safeguards against misuse and round-tripping of money.
The government expects the move to encourage global fund managers to relocate to India, bringing high-value activities and jobs. The provisions will apply across the country, including the International Financial Services Centre.
For data centres, the Bill proposes simpler rules by removing approval requirements for foreign cloud companies using Indian data centres. It also allows Indian data centres to operate on a leased basis rather than requiring direct ownership. The government expects this to support the development of large-scale AI data infrastructure and attract investment.
The Bill also proposes tax relief for investors in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs). Investors would continue to receive dividends tax-free even after the operating company shifts to the new Income Tax regime. A modest additional charge would instead be imposed at the operating-company level.
A major focus is electronics manufacturing. The Bill proposes extending by 10 years, until 2040-41, the income-tax exemption for foreign companies supplying machinery and tools to Indian factories producing specified electronic goods under contract manufacturing arrangements.
The specified products include mobile phones, laptops, personal computers, tablets, servers and their key parts and accessories.
To strengthen component supply chains, foreign companies storing electronic components in Indian customs warehouses for supply to local contract manufacturers would receive a 15-year income-tax exemption until 2040-41.
The Bill also proposes amendments to the **Payment and Settlement Systems Act, 2007**, and the Income Tax Act to change the existing legal framework governing Merchant Discount Rate (MDR) on notified electronic payment modes.
Currently, banks and payment service providers cannot charge users for specified electronic payment modes mandated under Section 269SU, including RuPay debit cards and BHIM-UPI QR codes.