Tax Amendment Bill Explained: FDI Push, Jobs, UPI Charges. What Changes?

The amendments in the new Bill point towards a policy objective of attracting global capital and business activity into India, say experts.

· NDTV

Show
Quick Read
Summary is AI-generated, newsroom-reviewed

  • The Lok Sabha passed the Taxation and Other Laws (Amendment) Bill, 2026 on Thursday
  • The bill may allow banks to charge MDR fees on large UPI transactions in the future
  • Foreign fund managers can now relocate to India with reduced tax risks under the bill

When will banks start charging fees for using UPI payments?
New Delhi:

The Lok Sabha passed the "Taxation and Other Laws (Amendment) Bill, 2026" on Thursday. The bill is aimed to make India more attractive to foreign money, foreign factories, and foreign fund managers.

However, the bill has implications for ordinary citizens as well. Let's break it down it step by step.

UPI payments

Right now, when you tap to pay with UPI or swipe your RuPay card, the shopkeeper isn't charged anything extra by the bank. That's because of a rule that currently blocks banks and payment companies from levying something called MDR -- Merchant Discount Rate -- on these transactions. On UPI, that toll has been waived since 2020, which is a big reason UPI became so massive, so fast.

This bill removes the legal wall that stops banks from charging that toll in the future. It doesn't impose a charge today. But it opens the door for one later, if the government decides to notify it. Shopkeepers might end up paying a small fee to accept your UPI payment -- and as per experts such costs often get quietly passed on to customers. However, as per media reports, only merchants handling big ticket transactions will be charged. So, payments to vegetable or tea vendors remain unaffected.

Attracting Foreign Investment

The bigger chunk of the bill is about making India friendlier to outside investors. 

Fund managers get a welcome mat. Earlier, if a fund manager sitting abroad wanted to move to India, a long list of rules made it risky -- the whole foreign fund could suddenly become taxable in India. The bill trims this list down, so managers can relocate here without that fear. More such managers in India could mean more jobs and more money flowing through Indian markets.

Your REIT or InvIT investment stays tax-free. If you've ever put money into a REIT (real estate investment trust) or InvIT (infrastructure investment trust) through your mutual fund or demat account, the dividends you earn will keep getting tax-free treatment, even as the underlying company shifts to the new tax regime. So, a good news for small investors.

Electronics manufacturing gets a longer runway. Foreign companies that supply machines to Indian factories making phones, laptops, and tablets get a tax break extended by ten more years. The idea: convince more of these factories to set up shop here, which -- down the line -- could mean more manufacturing jobs and, eventually, cheaper devices.

Besides, foreign diamond traders and cloud companies running Indian data centres get tax exemptions too. The exemptions are aimed at pulling in more of that global business.

Essentially, with this bill, the government is making a pitch to foreign investors to invest in India. Grant Thornton Bharat Partner-Tax, Richa Sawhney, said the Bill signals a calibrated shift from short-term relief to long-term competitiveness. "The liberalisation of the fund management regime, incentives for electronics supply chains, facilitation measures for data centres and diamond trading and tax relief for foreign investors in government securities collectively point towards a policy objective of attracting global capital and business activity into India. Collectively, the amendments reflect a clear emphasis on investment facilitation, supply-chain resilience and long-term tax certainty," Sawhney added.

Got a follow‑up question on this article? Go on

How may i help you today

Show full article

Track Latest News Live on NDTV.com and get news updates from India and around the world

Follow us:
UPI Charges, Lok Sabha, Taxation Law