Lok Sabha passes tax amendments, Rajya Sabha clears extra FY26 spending
Parliament advanced two key pieces of financial legislation on Thursday, with the Lok Sabha passing the Taxation and Other Laws (Amendment) Bill, 2026, to fine-tune
Parliament advanced two key pieces of financial legislation on Thursday, with the Lok Sabha passing the Taxation and Other Laws (Amendment) Bill, 2026, to fine-tune the country's tax and payments architecture, and the Rajya Sabha returning the Appropriation (No. 3) Bill, 2026 to the lower house after approving it, completing the legislative process for authorising additional government expenditure for 2025-26. The Taxation and Other Laws (Amendment) Bill, 2026, passed by the Lok Sabha, seeks to amend three laws: the Payment and Settlement Systems Act, 2007, the Income-tax Act, 2025, and the Finance Act, 2026. The legislation is aimed at carrying out consequential changes and addressing issues arising from the implementation of recent tax and financial sector reforms. The amendments to the Income Tax Act, 2025 are expected to align provisions introduced under the new direct tax framework, while changes to the Finance Act, 2026 seek to remove ambiguities and ensure smoother implementation of tax measures announced in the Union Budget.
Amendments to the Payment and Settlement Systems Act, 2007 are intended to update the legal framework governing payment systems in line with evolving regulatory and technological requirements. Also Read | RITES eyes global market for refurbished Indian Railways diesel locomotives The amendment to the Payment and Settlement Systems Act, 2007, could pave the way for banks to charge merchant discount rate (MDR) fees on large Unified Payments Interface (UPI) transactions in the future. The tax amendments will also simplify the tax and regulatory framework for eligible offshore investment funds, lowering compliance burdens while keeping anti-abuse safeguards to encourage foreign fund managers to relocate their operations to India. The bill also extends tax benefits and exemptions to support specific manufacturing sectors (such as electronics) in response to global supply chain disruptions.
The bill’s passage marks another step in the government’s efforts to streamline tax administration following the enactment of the new Income Tax Act, which replaced the decades-old law with a simplified framework aimed at reducing litigation and improving compliance. Also Read | Centre sustains capex push in Q1 amid trade disruptions, geopolitical tensions Supplementary spending approved Separately, the Rajya Sabha returned the Appropriation (No. 3) Bill, 2026 to the Lok Sabha after approving it. The legislation authorises the withdrawal and appropriation of certain further sums from the Consolidated Fund of India to meet expenditure for the services of financial year 2025-26. Such appropriation bills are a constitutional requirement and allow the government to incur expenditure approved by Parliament through supplementary demands for grants. The additional spending authorisation covers expenditure that could not be fully provided for in the original Budget estimates or became necessary during the course of the financial year.
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