Amid Din, LS Passes Taxation Bill To Promote Domestic Electronic Manufacturing

The Lok Sabha on Thursday passed the Taxation and other Laws (Amendment) Bill without a debate due to persistent sloganeering by the Opposition over various issues, including alleged theft of donation at the Ram temple in Ayodhya.

After the passage of the bill, through which the government also amended the Payment and Settlement Systems Act, 2007, the House was adjourned for the day.

Through the Bill the government seeks to attract more foreign capital, promote domestic electronics manufacturing and make it easier for foreign cloud companies to use Indian data centres by providing "process certainty".

The Bill also proposes to remove the linkage between the Payment and Settlement Systems Act and the Income Tax Act, and give a legal backing to the government to modify the zero-MDR framework on UPI and RuPay card transactions.

At present, banks and payment-system providers cannot directly or indirectly charge users for payment made through UPI and RuPay debit cards. The Bill proposes allowing the Central government to decide, through notification, which electronic payment modes or transactions must remain free.

The Taxation and other Laws (Amendment) Bill, 2026, replaces the June 5 ordinance that provided I-T exemption to income from interest income and capital gains made by FPIs from investments in G-Secs.

The Bill proposes to make it easier for fund managers to relocate to India but cutting down on the list of conditions that these funds will have to satisfy to ensure that their global income does not get taxed in India.

To encourage domestic manufacturing by giving policy certainty, the Bill extends till 2040-41 the income tax exemption currently available to foreign companies that engage a contract manufacturer in India for producing electronics goods here.

Specified electronic items mentioned in the bill include mobile phones, laptops, personal computers, tablets, servers and their key parts and accessories.

To support component supply for electronics factories, the Bill proposes I-T exemption for 15 years till 2040-41 to foreign companies that store components in customs warehouses to further supply them to a contract manufacturer in India.

The Bill also removes the approval and notification requirements for foreign cloud companies that use Indian data centres. It also proposes that Indian data centres be run on a leased basis rather than only under direct ownership.

The proposals in the Bill share a single purpose of making India a more attractive and predictable place for global capital, manufacturing and business to come and stay, Finance Ministry sources said.

When the Chair called RSP Member N K Premachandran to move a statutory resolution disapproving the ordinance, he did not speak. The Bill was then put to vote and passed by a voice vote without a debate.

This is the seventh bill to be passed by the Lok Sabha in the ongoing Monsoon Session and the fifth one to be passed without a debate.

The House had discussed a bill to amend anti-paper leak law for 10 hours. A bill to make insult to national song 'Vande Mataram' a punishable offence was discussed briefly with two members participating in the debate.

Earlier in the day, Speaker Om Birla had adjourned the House till 2 PM soon after it met due to persistent sloganeering by opposition members. Thursday was the 14th day when the House could not complete the Question Hour in this session, which started on July 20.