THE TAXATION AND OTHER LAWS AMENDMENT BILL 2026

jftLVªh lañ Mhñ ,yñ—¼,u½04@0007@2003—26 REGISTERED NO. DL—(N)04/0007/2003—26 सी.जी.-डीx.एxलx.G-अID.-1H70x8x2x026-275521 CG-DL-E-17082026-275521 xxxGIDExxx vlk/kkj.k EXTRAORDINARY Hkkx II — [k.M 1 PART II — Section 1 izkf/kdkj ls izdkf'kr PUBLISHED BY AUTHORITY lañ 37] ubZ fnYyh] lkseokj] vxLr 17] 2026@Jko.k 26] 1948 ¼'kd½ No. 37] NEW DELHI, MONDAY, AUGUST 17, 2026/SRAVANA 26, 1948 (Saka) bl Hkkx esa fHkUu i`"B la[;k nh tkrh gS ftlls fd ;g vyx ladyu ds :i esa j[kk tk ldsA Separate paging is given to this Part in order that it may be filed as a separate compilation. MINISTRY OF LAW AND JUSTICE (Legislative Department) New Delhi, the 17th August, 2026/Sravana 26, 1948 (Saka) The following Act of Parliament received the assent of the President on BillNo. 150-F of 2026 the 17th August, 2026 and is hereby published for general information:— THE TAXATION AND OTHER LAWS (AMENDMENT) ACT, 2026 THE TAXATION AND OTHER LAWS (AMENDMENT)BILL, 2026 No. 21 of 2026 (AS PASSED BY THE HOUSES OF PARLIAMENT) A [17th August, 2026.] An Act further to amend the PaymBeInLtL and Settlement Systems Act, 2007 furthearn tod athmee nIdn cthoem Pea-ytmaxe nAt catn,d 2 S0e2tt5le, maenndt Stoy satemmesn Adc tt,h 2e0 0F7in aanndc teh eA Icntc,o 2m0e2-t6a.x Act, 2025, and to amend the Finance Act,2026. BE it enacted by Parliament in the Seventy-seventh Year of the Republic of India as follows:— CHAPTERI PRELIMINARY 1. (1) This Act may be called the Taxation and Other Laws (Amendment) Short title and commencement. Act, 2026. (2) Save as otherwise provided in this Act, it shall be deemed to have come into force on the 1st day of April, 2026.2 THE GAZETTE OF IND2I A EXTRAORDINARY [Part II— CHAPTER II AMENDMENT TO THE PAYMENT AND SETTLEMENT SYSTEMS ACT, 2007 Amendment of 2. In the Payment and Settlement Systems Act, 2007, in section 10A, for the Act 51 of 2007. words, figures and letters “the electronic modes of payment prescribed under section 269SU of the Income-tax Act, 1961”, the words “one or more electronic 43 of 1961. modes of payment as the Central Government may, by notification, specify” shall be substituted with effect from the date of publication of this Act in the Official Gazette. CHAPTER III AMENDMENTS TO THE INCOME-TAXACT, 2025 Substitution of 3. In the Income-tax Act, 2025 (hereafter in this Chapter referred to as the principal 30 of 2025. new Schedule Act), for Schedule I, the following Schedule shall be substituted, namely:— for Schedule I. ‘SCHEDULE I [Seesection 9(12)] CONDITIONS FOR CERTAIN ACTIVITIES NOT TO CONSTITUTE BUSINESS CONNECTION IN INDIA 1.(1) The eligible investment fund referred to in section 9(12) shall be a fund established or incorporated or registered outside India, which collects funds from its members for investing it for their benefit, and fulfils the following conditions:— (a)the fund is not a person resident in India; (b)the fund is— (i)a resident of a country or a specified territory with which an agreement referred to in section 159(1) or (2) has been entered into; or (ii) established or incorporated or registered in a country or a specified territory as the Central Government may, by notification, specify; (c) the aggregate participation or investment in the fund, directly by persons resident in India, does not exceed 5% of the corpus of the fund as on the 1st April and the 1st October of the tax year, and— (i) for the purposes of calculation of such aggregate participation or investment in the fund, any contribution up to twenty-five crore rupees made by the eligible fund manager during the first three years of operation of the fund shall not be taken into account; or (ii) where the said aggregate participation or investment in the fund exceeds 5% on the 1st April or the 1st October of the tax year, the condition mentioned in this clause shall be deemed to be satisfied, if it is satisfied within four months of the 1st April or the 1st October, as the case may be, of such tax year; (d) the fund shall not carry on or control and manage, directly or indirectly, any business in India; and (e)no person acting on behalf of the fund engages in any activity which constitutes a business connection in India other than the activities undertaken by the eligible fund manager on its behalf. (2)The eligible fund manager referred to in section 9(12), in respect of an eligible investment fund,shall be any person who is engaged in the activity of fund management and fulfils the following conditions:—Sec. 1] THE GAZETTE OF IND3I A EXTRAORDINARY 3 (a) the person is not an employee of the eligible investment fund or a connected person of such fund; (b) the person is registered as a fund manager or an investment advisor in accordance with the specified regulations; (c)the person is acting in the ordinary course of his business as a fund manager; and (d) the person along with his connected persons shall not be entitled, directly or indirectly, to more than 20% of the profits accruing or arising to the eligible investment fund from the transactions carried out by the fund through the fund manager. (3) Every eligible investment fund shall, in respect of its activities in a tax year, furnish within ninety days from the end of the tax year,–– (a)a statement in the prescribed form to the prescribed income-tax authority containing information relating to the fulfilment of the conditions specified in this Schedule; and (b)provide such other relevant information or documents, as may be prescribed. (4) The provisions of this Schedule shall apply as per such guidelines and in such manner, as the Board may prescribe in this behalf. 2.In this Schedule, the expressions— (a) “connected person” shall have the meaning assigned to it in section 184(5); (b)“corpus” means the total amount of funds raised for the purpose of investment by the eligible investment fund as on a particular date; (c)“specified regulations” means–– (i) the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013; or (ii) the Securities and Exchange Board of India (Portfolio Managers) Regulations, 2020; or (iii) such other regulations made under the Securities and Exchange Board of India Act, 1992 (15 of 1992), as may be notified in this behalf.’. 4.In Schedule IV to the principal Act, in the Table,— Amendment of Schedule IV. (a)in serial number 13A, in column D,— (i)for clause (d), the following clause shall be substituted, namely:— “(d) the contract manufacturer produces specified electronic goods on behalf of the foreign company for a consideration; and”; (ii) in clause (e), for the figures “2030-2031”, the figures “2040-2041” shall be substituted; (b)in serial number 13C, in column D, clause (a) shall be omitted; (c) after serial number 13C and entries relating thereto, the following shall be inserted, namely:—4 THE GAZETTE OF IND4I A EXTRAORDINARY [Part II— A B C D “13D. Any interest on A Foreign Such exemption shall Government Institutional Investor. be subject to furnishing security, and any of information in such capital gains arising form and manner, as may from the sale, be prescribed. exchange or transfer of such Government security. 13E. Any interest on Bank for Such exemption shall Government International be subject to furnishing security, and any Settlements. of information in such capital gains arising form and manner, as may from the sale, be prescribed.”; exchange or transfer of such Government security. (d) after serial number 13E as so inserted and the entries relating thereto, the following shall be inserted, with effect from the 1st day of October, 2026, namely:— A B C D “13F. Any income on A foreign (a) The sale of rough sale of rough company–– diamonds is carried out in diamonds. any notified special zone (a) engaged in as referred to in the business of section 9(9)(c)(ii)(C); diamond mining; or (b) such foreign (b) being a company maintains and sightholder of the furnishes such company referred to information in such form in clause (a); or and manner, as may be prescribed; and (c) being a broker, aggregator (c) such exemption or a tender and shall be available up to auction entity the tax year ending on the connected with sale 31st March, 2041. of rough diamonds. 13G. Any income A foreign (a) Such exemption accruing or arising company, which shall be available on sale on account of stores components of components by such storage of in a warehouse in a foreign company; components in a custom bonded area (b) such contract warehouse in a for providing them manufacturer produces custom bonded to a contract electronic goods on area. manufacturer to be behalf of any foreign used for company; manufacturing of specified electronic goods.Sec. 1] THE GAZETTE OF IND5I A EXTRAORDINARY 5 A B C D (c) such exemption shall be subject to furnishing of information in such form and manner, as may be prescribed; and (d) such exemption shall be available up to the tax year ending on the 31st March, 2041.”; (e) after Note 2 below the Table, the following Note shall be inserted, namely:— ‘Note 2A: For the purposes of Sl. No. 13A, the expression “specified electronic goods” means— (a)mobile phones; or (b)laptops, all-in-one personal computers and tablets; or (c)servers and ultra small form factor (USFF); or (d)sub-assemblies to the finished goods mentioned in clauses (a) to (c); or (e)hearables and wearables and accessories related to the finished goods mentioned in clauses (a) to (c).’; (f) in Note 3 below the Table, for clause (c), the following clause shall be substituted, namely:— ‘(c) “specified data centre” means a data centre which— (i) is operated by an Indian company, whether by way of owning or leasing; and (ii)satisfiessuch other conditions as may be prescribed.’; (g) after Note 3 below the Table, the following Note shall be inserted, namely:— ‘Note 4: For the purposes of Sl. Nos. 13D and 13E,–– (a) “Bank for International Settlements” means the Bank for International Settlements established at the Hague Conference in 1930 and headquartered at Basel, Switzerland; (b) “Foreign Institutional Investor” shall have the meaning assigned to it in section 210(6)(a); (c) “Government security” shall have the same meaning as assigned to it in section 2(f) of the Government Securities Act, 2006 (38 of 2006).’; (h)after Note 4 as so inserted, the following Notes shall be inserted with effect from the 1st day of October, 2026, namely:—6 THE GAZETTE OF IND6I A EXTRAORDINARY [Part II— ‘Note 5: For the purposes of Sl. No. 13F, the expression “rough diamond” means any diamond that is unworked or simply sawn, cleaved or bruted and falling under the Tariff Heading 7102 10, 7102 21, or 7102 31 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and accompanied by the Kimberley Process Certificate. Note 6: For the purposes of Sl. No. 13G,— (a) “contract manufacturer” means an Indian company which produces specified electronic goods on behalf of any foreign company in a custom bonded area; (b) “custom bonded area” means a warehouse as referred to in section 65 of the CustomsAct, 1962 (52 of 1962); and (c) “specified electronic goods” shall have the meaning assigned to it in Note 2A.’. Amendment of 5. In Schedule V to the principal Act, in the Table, in serial number 5, in Schedule V. column D, clause (b) shall be omitted. CHAPTER IV AMENDMENT TO THE FINANCE ACT, 2026 Amendment of 6.In section 3 of the Finance Act, 2026,— Act 4 of 2026. (a)in sub-section (4), in clause (b), in the Table, for serial number 9 and the entries relating thereto, the following shall be substituted:— A B C D “9. 200 or 201. Every domestic 10%. company other than a special purpose vehicle referred to in Schedule V [Note 2]. 9A. 200 or 201. Every domestic 25%.”; company, being a special purpose vehicle referred to in Schedule V [Note 2]. (b) in sub-section (12), in clause (b), in the Table, for serial number 9 andthe entries relating thereto, the following shall be substituted:— A B C D “9. 200 or 201. Every domestic 10%. company other than a special purpose vehicle referred to in Schedule V [Note 2]. 9A. 200 or 201. Every domestic 25%.”. company, being a special purpose vehicle referred to in Schedule V [Note 2].Sec. 1] THE GAZETTE OF IND7I A EXTRAORDINARY 7 CHAPTER V MISCELLANEOUS Ord.2 of 2026. 7.(1) The Income-tax (Amendment) Ordinance, 2026 is hereby repealed. Repeal and saving. (2)Notwithstanding such repeal, anything done or any action taken under the provisions of the said Ordinance, shall be deemed to have been done or taken under the corresponding provisions of this Act. ——— The above Bill has been passed by the Houses of ParDliRam. ReAntJ.IV MANI, Secretary to the Govt. of India. I hereby certify that this Bill is a Money Bill within the meaning of article 110 of the Constitution of India. Dated the Speaker. ——— I assent to this Bill. Dated the President. UPLOADED BY THE MANAGER, GOVERNMENT OF INDIA PRESS, MINTO ROAD, NEW DELHI–110002 AND PUBLISHED BY THE CONTROLLER OF PUBLICATIONS, DELHI–110054. MGIPMRND—520 GI—17.08.2026