The Union government has tabled the Tax and Other Laws (Amendment) Bill, 2026 in the Lok Sabha, aimed at boosting foreign investment and supporting India’s push to become a global manufacturing hub.
A key provision would empower the Centre to decide on waivers for charges collected from merchants on electronic payment methods. The move is expected to revive debate around the long-running “zero fee” policy for digital transactions.
Banks and payment companies have repeatedly argued that the current waiver regime makes it difficult to recover transaction processing costs. The bill’s proposal is seen as a potential shift in that direction.
The development comes after the government had earlier denied reports that the Finance Ministry and the Reserve Bank of India were considering allowing charges on UPI transactions for large merchants, even as the issue now finds mention in the bill.
Beyond payments, the bill proposes multiple tax measures: easing rules for managers of foreign investment funds operating from India while not treating such activity as doing business in India; extending income-tax exemptions up to 2040–41 for foreign firms supplying machinery for contract manufacturing of phones, laptops, tablets and servers; offering a 15-year income-tax exemption for foreign firms storing electronics components in Indian customs warehouses for contract manufacturers; removing certain approval processes for foreign cloud firms using Indian data centres; and permitting data centres to operate on a lease basis as well, which could attract more investment in AI-focused data centres.
