Lok Sabha Passes Tax Bill: No Immediate UPI Charges Confirmed

The Lok Sabha officially passed the Taxation and Other Laws (amendment) Bill, 2026, on August 6, 2026. This significant legislation addresses digital payments, foreign investment, and specific industry incentives.

A key point of public interest is the status of UPI and RuPay transactions. The Bill explicitly clarifies that it does not impose any charges on UPI or RuPay transactions, a key concern for many users. While it removes existing legal links between fee-free payments and income-tax laws, it grants the Centre authority to designate payment modes where charges cannot be levied. This means any future changes to digital payment costs would necessitate a separate government notification.

Boosting Foreign Capital and Investment

A primary objective of the new legislation is to attract foreign capital and stimulate business activity within India. It achieves this by simplifying several requirements under the existing Section 9A regime. The amendments aim to facilitate greater fund management operations in India for overseas funds.

• Removal of conditions concerning the number of investors.
• Elimination of requirements for individual investor share.
• No longer mandates specific investment concentration.
• Discontinuation of conditions related to the monthly corpus for offshore funds.

Targeted Tax Relief and Industry Growth

Beyond foreign investment, the Bill also extends tax relief and incentives to several targeted industries. These measures are designed to promote specific economic activities and encourage growth in strategic sectors.

• Extended tax relief for foreign companies supplying machinery and equipment for electronics manufacturing, including mobile phones, laptops, and tablets.
• Concessions for eligible foreign businesses storing electronic components in customs-bonded warehouses.
• Incentives for specified data-centre operations.
• Tax benefits for foreign companies involved in trading rough diamonds through notified zones.
• Protection for the tax treatment of certain dividend income distributed via Real Estate Investment Trusts (Reits) and Infrastructure Investment Trusts (InvITs).

The comprehensive legislation amends the Income-tax Act, 2025, the Finance Act, 2026, and the Payment and Settlement Systems Act, 2007. It also officially replaces the Income-tax (amendment) Ordinance, 2026, consolidating these changes into law.