The Bill seeks to amend the Income-tax Act, 2025, the Finance Act, 2026 and the Payment and Settlement Systems Act, 2007.
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According to the government, the amendments have been proposed against the backdrop of evolving geopolitical developments and disruptions in global trade and supply chains. It said the changes are intended to mitigate external economic shocks, support sectors affected by global conditions, ensure domestic economic stability and improve ease of doing business.
One of the key proposals seeks to simplify the tax framework governing eligible offshore investment funds and eligible fund managers by reducing compliance requirements while retaining core safeguards. The move is aimed at promoting fund management activity in India and providing greater tax certainty to global investors.
The Bill also proposes fresh tax exemptions for foreign investors in government securities. It seeks to exempt interest income as well as capital gains arising from the sale, exchange or transfer of government securities for Foreign Institutional Investors (FIIs) and the Bank for International Settlements (BIS), subject to prescribed reporting requirements.
In a boost for electronics manufacturing, the government has proposed extending the tax exemption available to foreign companies supplying capital goods, equipment or tooling to Indian contract manufacturers for specified electronic goods until the tax year ending March 31, 2041, from the earlier sunset date of 2030-31.The legislation also expands the definition of “specified electronic goods” to include laptops, tablets, servers, hearables, wearables and related accessories, widening the scope of the tax incentive.
To strengthen India’s position in the global diamond trade, the Bill proposes extending tax exemption until March 31, 2041, for income earned by eligible foreign diamond mining companies, sightholders, brokers, aggregators and auction entities from the sale of rough diamonds through notified special zones.
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For business trusts, the proposed legislation removes an 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.
The Bill also proposes amendments to the Payment and Settlement Systems Act, 2007, empowering the Central Government to notify electronic payment modes on which banks or payment system providers cannot levy charges. It also removes references to the Income-tax Act from provisions relating to electronic payment modes.
The legislation seeks to repeal the Income-tax (Amendment) Ordinance, 2026, while validating actions already taken under it. The government said the Bill incorporates additional taxation measures considered necessary following stakeholder consultations after the enactment of the Finance Act, 2026.
(With inputs from ANI)