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REGISTERED NO. DL-(N)04/0007/2003-26
The Gazette of India
CG-DL-E-17082026-275521
EXTRAORDINARY
PART II—Section 1
PUBLISHED BY AUTHORITY
No. 37]
NEW DELHI, MONDAY, AUGUST 17, 2026/SRAVANA 26, 1948 (Saka)
Separate paging is given to this Part in order that it may be filed as a separate compilation.
MINISTRY OF LAW AND JUSTICE
(Legislative Department)
New Delhi, the 17th August, 2026/Sravana 26, 1948 (Saka)
The following Act of Parliament received the assent of the President on
the 17th August, 2026 and is hereby published for general information:—
THE TAXATION AND OTHER LAWS (AMENDMENT) ACT, 2026
No. 21 OF 2026
[17th August, 2026.]
An Act further to amend the Payment and Settlement Systems Act, 2007
and the Income-tax Act, 2025, and to amend the Finance Act, 2026.
BE it enacted by Parliament in the Seventy-seventh Year of the Republic of
India as follows:-
CHAPTER I
PRELIMINARY
1. (1) This Act may be called the Taxation and Other Laws (Amendment)
Act, 2026.
(2) Save as otherwise provided in this Act, it shall be deemed to have come
into force on the 1st day of April, 2026.
Short title and
commencement.
THE GAZETTE OF INDIA EXTRAORDINARY
[Part II-
CHAPTER II
AMENDMENT TO THE PAYMENT AND SETTLEMENT SYSTEMS ACT, 2007
Amendment of
Act 51 of 2007.
2. In the Payment and Settlement Systems Act, 2007, in section 10A, for the
words, figures and letters "the electronic modes of payment prescribed under
section 269SU of the Income-tax Act, 1961", the words "one or more electronic
modes of payment as the Central Government may, by notification, specify” shall be
substituted with effect from the date of publication of this Act in the Official Gazette.
43 of 1961.
CHAPTER III
AMENDMENTS TO THE INCOME-TAX ACT, 2025
Substitution of
new Schedule
for Schedule I.
3. In the Income-tax Act, 2025 (hereafter in this Chapter referred to as the principal
Act), for Schedule I, the following Schedule shall be substituted, namely:-
30 of 2025.
'SCHEDULE I
[See section 9(12)]
CONDITIONS FOR CERTAIN ACTIVITIES NOT TO CONSTITUTE BUSINESS
CONNECTION IN INDIA
1. (1) The eligible investment fund referred to in section 9(12) shall be
a fund established or incorporated or registered outside India, which collects
funds from its members for investing it for their benefit, and fulfils the
following conditions:-
(a) the fund is not a person resident in India;
(b) the fund is
(i) a resident of a country or a specified territory with which
an agreement referred to in section 159(1) or (2) has been entered
into; or
(ii) established or incorporated or registered in a country or
a specified territory as the Central Government may, by
notification, specify;
(c) the aggregate participation or investment in the fund, directly
by persons resident in India, does not exceed 5% of the corpus of the
fund as on the 1st April and the 1st October of the tax year, and—
(i) for the purposes of calculation of such aggregate
participation or investment in the fund, any contribution up to
twenty-five crore rupees made by the eligible fund manager during
the first three years of operation of the fund shall not be taken into
account; or
(ii) where the said aggregate participation or investment in
the fund exceeds 5% on the 1st April or the 1st October of the tax
year, the condition mentioned in this clause shall be deemed to be
satisfied, if it is satisfied within four months of the 1st April or the
1st October, as the case may be, of such tax year;
(d) the fund shall not carry on or control and manage, directly or
indirectly, any business in India; and
(e) no person acting on behalf of the fund engages in any activity
which constitutes a business connection in India other than the activities
undertaken by the eligible fund manager on its behalf.
(2) The eligible fund manager referred to in section 9(12), in respect of
an eligible investment fund, shall be any person who is engaged in the activity
of fund management and fulfils the following conditions:-
THE GAZETTE OF INDIA EXTRAORDINARY
(a) the person is not an employee of the eligible investment fund
or a connected person of such fund;
(b) the person is registered as a fund manager or an investment
advisor in accordance with the specified regulations;
(c) the person is acting in the ordinary course of his business as a
fund manager; and
(d) the person along with his connected persons shall not be
entitled, directly or indirectly, to more than 20% of the profits accruing
or arising to the eligible investment fund from the transactions carried
out by the fund through the fund manager.
(3) Every eligible investment fund shall, in respect of its activities in a
tax year, furnish within ninety days from the end of the tax year,—
(a) a statement in the prescribed form to the prescribed income-tax
authority containing information relating to the fulfilment of the
conditions specified in this Schedule; and
(b) provide such other relevant information or documents, as may
be prescribed.
(4) The provisions of this Schedule shall apply as per such guidelines
and in such manner, as the Board may prescribe in this behalf.
2. In this Schedule, the expressions—
(a) "connected person" shall have the meaning assigned to it in
section 184(5);
(b) "corpus" means the total amount of funds raised for the purpose
of investment by the eligible investment fund as on a particular date;
(c) "specified regulations” means—
(i) the Securities and Exchange Board of India (Investment
Advisers) Regulations, 2013; or
(ii) the Securities and Exchange Board of India (Portfolio
Managers) Regulations, 2020; or
(iii) such other regulations made under the Securities and
Exchange Board of India Act, 1992 (15 of 1992), as may be
notified in this behalf.'.
4. In Schedule IV to the principal Act, in the Table, —
(a) in serial number 13A, in column D,—
(i) for clause (d), the following clause shall be substituted, namely:—
"(d) the contract manufacturer produces specified electronic
goods on behalf of the foreign company for a consideration; and";
(ii) in clause (e), for the figures "2030-2031", the figures
"2040-2041" shall be substituted;
(b) in serial number 13C, in column D, clause (a) shall be omitted;
(c) after serial number 13C and entries relating thereto, the following
shall be inserted, namely:-
Amendment of
Schedule IV.
THE GAZETTE OF INDIA EXTRAORDINARY
[Part II-
+-----+-----------------------------------+-----------------------------------+-----------------------------------+
| A | B | C | D |
+=====+===================================+===================================+===================================+
| "13D.| Any interest on Government | A Foreign Institutional Investor. | Such exemption shall be subject |
| | security, and any capital gains | | to furnishing of information in |
| | arising from the sale, exchange | | such form and manner, as may be |
| | or transfer of such Government | | prescribed. |
| | security. | | |
+-----+-----------------------------------+-----------------------------------+-----------------------------------+
| 13E.| Any interest on Government | Bank for International | Such exemption shall be subject |
| | security, and any capital gains | Settlements. | to furnishing of information in |
| | arising from the sale, exchange | | such form and manner, as may be |
| | or transfer of such Government | | prescribed."; |
| | security. | | |
+-----+-----------------------------------+-----------------------------------+-----------------------------------+
(d) after serial number 13E as so inserted and the entries relating thereto,
the following shall be inserted, with effect from the 1st day of October, 2026,
namely:-
+-----+-----------------------------------+-----------------------------------+-----------------------------------+
| A | B | C | D |
+=====+===================================+===================================+===================================+
| "13F.| Any income on sale of rough | A foreign company— | (a) The sale of rough diamonds |
| | diamonds. | | is carried out in any notified |
| | | (a) engaged in the business of | special zone as referred to in |
| | | diamond mining; or | section 9(9)(c)(ii)(C); |
| | | | |
| | | (b) being a sightholder of the | (b) such foreign company |
| | | company referred to in clause | maintains and furnishes such |
| | | (a); or | information in such form and |
| | | | manner, as may be prescribed; |
| | | | and |
| | | (c) being a broker, aggregator | |
| | | or a tender and auction entity | (c) such exemption shall be |
| | | connected with sale of rough | available up to the tax year |
| | | diamonds. | ending on the 31st March, |
| | | | 2041. |
+-----+---------------------------------+---------------------------------+---------------------------------+
| 13G.| Any income accruing or arising | A foreign company, which | (a) Such exemption shall be |
| | on account of storage of | stores components in a | available on sale of components |
| | components in a warehouse in a | warehouse in a custom bonded | by such foreign company; |
| | custom bonded area. | area for providing them to a | |
| | | contract manufacturer to be | (b) such contract manufacturer |
| | | used for manufacturing of | produces electronic goods on |
| | | specified electronic goods. | behalf of any foreign company; |
+-----+---------------------------------+---------------------------------+---------------------------------+
(e) after Note 2 below the Table, the following Note shall be inserted,
namely:-
'Note 2A: For the purposes of Sl. No. 13A, the expression “specified
electronic goods" means-
(a) mobile phones; or
(b) laptops, all-in-one personal computers and tablets; or
(c) servers and ultra small form factor (USFF); or
(d) sub-assemblies to the finished goods mentioned in clauses (a)
to (c); or
(e) hearables and wearables and accessories related to the finished
goods mentioned in clauses (a) to (c).';
(f) in Note 3 below the Table, for clause (c), the following clause shall be
substituted, namely:—
'(c) "specified data centre” means a data centre which-
(i) is operated by an Indian company, whether by way of owning
or leasing; and
(ii) satisfies such other conditions as may be prescribed.';
(g) after Note 3 below the Table, the following Note shall be inserted,
namely:-
'Note 4: For the purposes of Sl. Nos. 13D and 13E,—
(a) "Bank for International Settlements” means the Bank for
International Settlements established at the Hague Conference in 1930
and headquartered at Basel, Switzerland;
(b) "Foreign Institutional Investor" shall have the meaning
assigned to it in section 210(6)(a);
(c) "Government security" shall have the same meaning as
assigned to it in section 2(f) of the Government Securities Act, 2006
(38 of 2006).';
(h) after Note 4 as so inserted, the following Notes shall be inserted with effect
from the 1st day of October, 2026, namely:—
THE GAZETTE OF INDIA EXTRAORDINARY
[Part II-
'Note 5: For the purposes of Sl. No. 13F, the expression “rough
diamond" means any diamond that is unworked or simply sawn, cleaved or
bruted and falling under the Tariff Heading 7102 10, 7102 21, or 7102 31 of
the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and
accompanied by the Kimberley Process Certificate.
Note 6: For the purposes of Sl. No. 13G,—
(a) "contract manufacturer" means an Indian company which
produces specified electronic goods on behalf of any foreign company
in a custom bonded area;
(b) "custom bonded area" means a warehouse as referred to in
section 65 of the Customs Act, 1962 (52 of 1962); and
(c) "specified electronic goods" shall have the meaning assigned
to it in Note 2A.'.
Amendment of
Schedule V.
5. In Schedule V to the principal Act, in the Table, in serial number 5, in
column D, clause (b) shall be omitted.
CHAPTER IV
AMENDMENT TO THE FINANCE ACT, 2026
Amendment of
Act 4 of 2026.
6. In section 3 of the Finance Act, 2026,
(a) in sub-section (4), in clause (b), in the Table, for serial number 9 and
the entries relating thereto, the following shall be substituted:-
+-----+------------+------------------------------------------+--------+
| A | B | C | D |
+=====+============+==========================================+========+
| "9. | 200 or 201.| Every domestic company other than a | 10%. |
| | | special purpose vehicle referred to in | |
| | | Schedule V [Note 2]. | |
+-----+------------+------------------------------------------+--------+
| 9A. | 200 or 201.| Every domestic company, being a special | 25%."; |
| | | purpose vehicle referred to in Schedule | |
| | | V [Note 2]. | |
+-----+------------+------------------------------------------+--------+
(b) in sub-section (12), in clause (b), in the Table, for serial number 9
and the entries relating thereto, the following shall be substituted:-
+-----+------------+------------------------------------------+--------+
| A | B | C | D |
+=====+============+==========================================+========+
| "9. | 200 or 201.| Every domestic company other than a | 10%. |
| | | special purpose vehicle referred to in | |
| | | Schedule V [Note 2]. | |
+-----+------------+------------------------------------------+--------+
| 9A. | 200 or 201.| Every domestic company, being a special | 25%.". |
| | | purpose vehicle referred to in Schedule | |
| | | V [Note 2]. | |
+-----+------------+------------------------------------------+--------+
THE GAZETTE OF INDIA EXTRAORDINARY
CHAPTER V
MISCELLANEOUS
7. (1) The Income-tax (Amendment) Ordinance, 2026 is hereby repealed.
(2) Notwithstanding such repeal, anything done or any action taken under the
provisions of the said Ordinance, shall be deemed to have been done or taken under
the corresponding provisions of this Act.
DR. RAJIV MANI,
Secretary to the Govt. of India.
Repeal and
saving.
UPLOADED BY THE MANAGER, GOVERNMENT OF INDIA PRESS, MINTO ROAD, NEW DELHI-110002
AND PUBLISHED BY THE CONTROLLER OF PUBLICATIONS, DELHI-110054.
MGIPMRND-520 GI-17.08.2026
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