The Income Tax Department on August 04, 2026, issued the FAQs on the Taxation and Other Laws (Amendment) Bill, 2026.
The FAQs are as stated:
Q.1 What are the present provisions of exemption in respect of income of foreign company arising on account of providing capital goods, equipment or tooling equipment to a contract manufacturer?
Ans: In the IT Act, 2025, vide Finance Act, 2026, exemption was provided to the income of a foreign company arising on account of providing capital goods, equipment or tooling to a contract manufacturer being a company resident in India. Such exemption shall be available up to the tax year 2030-2031. There are certain other conditions to be satisfied for the said exemption. Some of these conditions are: —
(a) Ownership of such capital goods, equipment or tooling remains with the foreign company;
(b) such capital goods, equipment or tooling is under the control and direction of the contract manufacturer.
(c) The contract manufacturer should be company resident in India and locatedinacustom bonded area;
(d) the contract manufacturer produces electronic goods on behalf of the foreign company for a consideration
Q2. Where are these provisions placed in the IT Act, 2025?
Ans: These provisions are part of Serial No. 13A of the Table in Schedule IV to the IT Act, 2025.
Q3. What amendment has been proposed in the IT Act, 2025 by the Taxation and Other Laws (Amendment) Bill, 2026 in respect of the aforesaid provision?
Ans: The Taxation and Other Laws (Amendment) Bill, 2026 proposes the following amendments in the said provision: —
(a) The aforesaid exemption has been further extended for another period of 10 years, i.e. till tax year 2040-41;
(b) Also, in order to provide more clarity and certainty, the definition of specified electronic goods has been provided.
Q.4 What definition of specified electronic goods has been provided in the proposed amendment?
Ans: In order to provide greater clarity and certainty, the expression “specified electronic goods” has been defined to mean, —
(i) mobile phones; or
(ii) laptops, all-in-one personal computers and tablets; or
(iii) servers and ultra small form factor (USFF); or
(iv) sub-assemblies to the finished goods mentioned in clauses (i) to(iii);
Or
(v) hearables and wearables and accessories related to the finishedgoodsmentioned in clauses (i) to (iii).
