The bill is expected to be tabled in parliament this week.
The Bill proposes extending tax exemptions for contract manufacturing of electronics until FY 2040-41, bringing mobile phones, laptops, tablets, servers, wearables and related components under the category of “Specified Electronic Goods.” The move is aimed at strengthening India’s electronics supply chain and boosting domestic manufacturing capacity, sources said.
However, the proposals also proposed to increase the tax burden on a section of companies. The surcharge on Special Purpose Vehicles (SPVs) opting for the new tax regime is proposed to rise from 10% to 25%, while the surcharge for other domestic companies will remain unchanged at 10%.
The legislation also seeks to make Indian government securities more attractive to overseas investors by proposing tax exemptions for foreign institutional investors (FIIs) on interest income and capital gains from Government Securities (G-Secs). A similar exemption has been proposed for the Bank for International Settlements (BIS) on its investments in government securities.
The Bill further proposes easing tax provisions for fund managers and Eligible Investment Funds to encourage global asset management activity in India, while offering relief to data centre operators and strengthening the country’s digital infrastructure ecosystem.
In the digital payments space, the Bill proposes that no bank or payment system provider can levy charges on electronic payment modes notified by the Centre, reinforcing the government’s push towards wider adoption of digital transactions.The proposed amendments also extend long-term tax certainty to the diamond sector by continuing exemptions on rough diamond sales by foreign mining companies, sightholders, brokers and auction or tender companies until March 31, 2041.
The measures underline the government’s focus on manufacturing-led growth, attracting global capital and creating a stable tax framework for businesses operating in India.