What are the new tax rules in 2026?

Key 2026 tax rule changes include G-Sec FII tax exemptions, 15-year tax relief for rough diamond trade, 2040-41 extension for electronics capital goods, REIT/InvIT SPV surcharge hike to 25%, and removal of 4 restrictive conditions for offshore investment funds.

What is the Taxation and Other Laws (Amendment) Bill, 2026?

It is a major tax reform legislation passed by Parliament in August 2026 amending the Income Tax Act 2025, Finance Act 2026, and Payment & Settlement Systems Act 2007.

Which Ministry governs the Taxation and Other Laws Amendment Bill 2026?

It is governed by the Ministry of Finance and was introduced in the Lok Sabha on August 4, 2026.

What tax exemption is provided for foreign investment in G-Secs?

Full income tax exemption on interest income and capital gains from G-Secs is provided for FIIs and BIS from April 1, 2026.

What is the tenure for tax exemption in the diamond sector?

Tax exemption on rough diamond sales in Notified Special Zones is provided from October 1, 2026 to March 31, 2041.

What provisions are made for the electronics manufacturing sector?

Tax exemption for storing components in customs bonded warehouses and extension of capital goods tax relief to 2040-41.

Which 4 conditions were removed for offshore investment funds?

Removed min 25 members, max 10% single investor cap, min ₹100 Cr monthly corpus, and 25% single entity investment cap.

What change was made to the REIT & InvIT SPV surcharge?

Surcharge rate for REIT/InvIT SPVs increased from 10% to 25%, while proposing tax exemptions on SPV dividend distributions.

What relaxation is granted to the Data Center sector?

Income tax exemptions for foreign data center service providers expanded to data centers leased and operated by Indian firms.

When was the Bill passed by both Houses of Parliament?

Introduced Aug 4, 2026; passed by Lok Sabha on Aug 6, 2026; passed by Rajya Sabha on Aug 10, 2026.

Taxation and Other Laws (Amendment) Bill, 2026: Key Provisions, Tax Exemptions, REIT & InvIT Surcharge | MPPSC & UPSC Notes PDF

Complete comprehensive notes on Taxation and Other Laws (Amendment) Bill, 2026 passed by Parliament. Ministry of Finance, Income Tax Act 2025, G-Secs FII tax exemption, rough diamond trade (2026-2041), electronics bonded warehouses, 4 fund rules removed, REIT/InvIT SPV surcharge (10% to 25%), and Data Centers for MPPSC & UPSC.

Deepraj Sikarwar (Editorial Team)12 August 202610 min read

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Google Featured Snippet: Taxation and Other Laws Amendment Bill 2026 Quick Summary

What is Taxation and Other Laws (Amendment) Bill, 2026: A landmark fiscal legislation passed by Parliament in August 2026 amending the Income Tax Act 2025, Finance Act 2026, and Payment & Settlement Systems Act 2007.
Nodal Ministry: Ministry of Finance.
Key Passage Dates: Introduced in Lok Sabha (Aug 4, 2026), Passed by Lok Sabha (Aug 6, 2026), Passed by Rajya Sabha (Aug 10, 2026).
6 Key Pillars: G-Sec Foreign Investment Relief, Diamond Industry SNZ Exemption (2026-2041), Electronics Supply Chains (2040-41), Offshore Fund Relaxations (4 Rules Removed), REIT/InvIT SPV Surcharge Hike (10% to 25%), and Data Center Extension.

Introduction & Key Legislative Timeline of the Bill

1. Ministry & Parliamentary Timeline

Nodal Ministry: Ministry of Finance, Govt of India
Introduced in Lok Sabha: August 4, 2026
Passed by Lok Sabha: August 6, 2026
Passed by Rajya Sabha: August 10, 2026
Amended Acts: Income Tax Act 2025, Finance Act 2026, and Payment and Settlement Systems Act 2007.

Indian Parliament Sansad Bhavan with financial dashboard overlay for Taxation and Other Laws Amendment Bill 2026

Key Provisions: G-Sec Foreign Investment & Diamond Industry Tax Exemption

2. Relief for Foreign Investors & Diamond Sector

1. Foreign Investment in Government Securities: Full tax exemption provided on interest income and capital gains (sale, exchange, or transfer) derived from G-Secs by notified foreign entities like FIIs and the Bank for International Settlements (BIS), effective April 1, 2026.
2. Tax Exemption for Diamond Industry: Exemption granted on income from sales of rough diamonds in Notified Special Zones for foreign diamond mining firms, brokers, aggregators, and tender/auction entities from October 1, 2026 to March 31, 2041.

Illustration of uncut diamonds, semiconductor microchips and Indian Government bond certificates representing tax incentives

Key Provisions: Electronics Manufacturing & Offshore Fund Regulation

3. Electronics Supply Chains & Relaxation for Investment Funds

3. Electronics Manufacturing Boost: Income tax exemption for foreign companies storing electronic components (phones, laptops, servers, sub-assemblies) in Customs Bonded Areas. Tax relief for capital goods and tooling supplies extended from 2030-31 to 2040-41.
4. India-Managed Offshore Funds: Removed four restrictive criteria for eligible offshore investment funds managed from India: minimum 25 members, 10% single investor holding cap, ₹100 Crore monthly average corpus requirement, and 25% entity investment cap.

Key Provisions: REIT, InvIT & Data Center Sector Reforms

4. Real Estate, Infrastructure & Digital Data Infrastructure

5. REIT & InvIT Reforms: Increased the surcharge rate for Special Purpose Vehicles (SPVs) of Business Trusts (REITs & InvITs) from 10% to 25%, while proposing tax exemptions on certain dividends distributed by SPVs to unitholders.
6. Data Center Incentive Expansion: Relaxed income tax conditions for foreign entities rendering data center services in India, extending tax relief to data centers leased and operated by Indian companies.

Futuristic illustration showing REIT office buildings, InvIT highways, and Data Centers in India

What are the New Tax Rules introduced in 2026?

5. Comprehensive New Tax Framework 2026

Income Tax Act 2025: Operationalized from April 1, 2026.
G-Sec Tax Relief: Tax exemption on interest and capital gains for FIIs and BIS.
REIT SPV Surcharge: SPV surcharge hiked to 25%.

Memory Formula for MPPSC & UPSC Exams

6. Fast Revision Summary & Memory Trick

Memory Trick: Taxation Amendment 2026 = Foreign Investment + Diamond + Electronics + Funds + REIT/InvIT + Data Center
Ministry: Ministry of Finance
SPV Surcharge Rate: Increased from 10% to 25%
Diamond Exemption Tenure: Oct 1, 2026 to Mar 31, 2041

Practice Questions

1Which Ministry is primarily associated with the Taxation and Other Laws (Amendment) Bill, 2026?

2Which of the following Acts is NOT amended by the Taxation and Other Laws (Amendment) Bill, 2026?

3According to the bill, from which date will the tax exemption on foreign investment in Government Securities (G-Secs) be applicable?

4What is the tenure set for tax exemption granted to foreign entities on rough diamond sales in Notified Special Zones?

5Until which year has the tax relief deadline for supply of capital goods and tooling for electronics manufacturing been extended?

6What is the revised surcharge rate for Special Purpose Vehicles (SPVs) of Business Trusts (REITs & InvITs)?

7Which of the following statements is TRUE regarding the relaxed criteria for eligible offshore investment funds managed from India?

8On which date was the Taxation and Other Laws (Amendment) Bill, 2026 passed by the Rajya Sabha?

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Taxation and Other Laws (Amendment) Bill, 2026: Key Provisions, Tax Exemptions, REIT & InvIT Surcharge | MPPSC & UPSC Notes PDF