The Ministry of Law and Justice, on August 17, 2026, issued the Taxation and Other Laws (Amendment) Act, 2026 to further amend the Payment and Settlement Systems Act, 2007 and the Income-tax Act, 2025.
The following has been stated:
• Digital Payments: Section 10A of the Payment and Settlement Systems Act, 2007 is amended to allow the Central Government to specify, by notification, one or more electronic modes of payment.
• Eligible Investment Funds: A new Schedule I prescribes conditions for eligible foreign investment funds to ensure their activities do not constitute a business connection in India. The Indian participation limit remains 5% of the fund corpus, with a ₹25 crore manager-contribution exclusion during the first three years and a four-month period to rectify excess participation.
• Fund Managers: Eligibility conditions have been prescribed, including registration under specified SEBI regulations and a restriction on the fund manager and connected persons being entitled to more than 20% of the fund's profits from transactions undertaken through the manager.
• Compliance: Eligible investment funds must furnish prescribed information to the income-tax authority within 90 days from the end of the tax year.
• Electronic Goods Manufacturing: Amendments to Schedule IV provide revised conditions for contract manufacturers producing specified electronic goods for foreign companies and extend the relevant exemption period from 2030-31 to 2040-41.
• Government Securities: Tax exemptions are introduced for Foreign Institutional Investors and the Bank for International Settlements in respect of interest and capital gains arising from Government securities, subject to prescribed information requirements.
Please refer to the document attached below for more details.
