India’s lower house has approved a comprehensive amendments bill aimed at simplifying offshore investment rules and extending sector-specific tax incentives, signalling a strategic move to boost investor confidence despite opposition protests.
India’s lower house on Thursday passed the Taxation and Other Laws (Amendment) Bill, 2026 without debate, as opposition lawmakers continued protests over police action against demonstrators on July 20, according to the parliamentary report. The measure, moved by Finance Minister Nirmala Sitharaman, was adopted by voice vote and is designed to amend the Payment and Settlement Systems Act, 2007, the Income-tax Act, 2025 and the Finance Act, 2026.
The government says the bill is meant to give businesses and investors greater certainty while supporting manufacturing and blunting the effect of global trade disruptions and supply-chain strain. It replaces the Income-tax (Amendment) Ordinance, 2026 and forms part of a broader effort to make India’s tax regime more predictable as the country navigates shifting geopolitical and economic conditions.
Among the most significant changes is a simplification of the rules for eligible offshore investment funds and fund managers. The aim is to cut compliance burdens while keeping core safeguards in place, a move intended to encourage fund management activity in India and reassure global investors. KPMG said related finance legislation passed by the Lok Sabha this week also included revisions to buyback taxation, under which certain share buyback proceeds are treated as capital gains, alongside changes affecting promoters, in what it described as an attempt to ease compliance and improve tax certainty.
The bill also extends several sector-specific tax incentives. It would lengthen the exemption for foreign companies supplying capital goods, equipment and tooling to Indian contract manufacturers for specified electronic goods until the tax year ending March 31, 2041, and widen the definition of those products to include laptops, tablets, servers, hearables, wearables and related accessories. It also proposes exemptions for foreign investors in government securities, tax relief for certain participants in rough diamond sales through notified special zones and the removal of a restriction that had blocked dividend exemptions for business trust unit holders where the special purpose vehicle had opted for the new tax regime. Separately, the bill amends the payments law so the central government can notify electronic payment modes on which banks or system providers may not levy charges.
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