Lok Sabha Passes Taxation and Other Laws (Amendment) Bill, 2026

The Lok Sabha has passed the Taxation and Other Laws (Amendment) Bill, 2026, marking a pivotal shift in India’s digital economy and industrial policy. The legislation introduces critical amendments to the Payment and Settlement Systems Act, 2007, granting the government the authority to permit banks to levy charges on Unified Payments Interface (UPI) transactions. This move signals a transition from the long-standing 'zero-MDR' (Merchant Discount Rate) regime, aiming to ensure the long-term financial sustainability of the digital payments ecosystem by allowing service providers to recover operational costs. Beyond the financial sector, the Bill serves as a strategic instrument for industrial growth. By providing targeted tax incentives, the government aims to bolster India’s electronics manufacturing capabilities and expand its cloud service operations. This dual-pronged approach is designed to reduce import dependency in hardware and strengthen the domestic digital infrastructure, aligning with the broader 'Make in India' and 'Digital India' initiatives. The incentives are expected to attract significant private investment, fostering a competitive environment for global and domestic tech firms to establish data centers and manufacturing hubs within the country.