The President Draupadi Murmu has given her assent to the bills amending the Taxation and Other Laws (Amendment) Act, 2026 and the Payment and Settlement Systems Act, 2007. Both bills have been approved by Parliament on 10th August.

The amendments to the Payment and Settlement Systems Act give the government a legal right to levy charges on UPI and RuPay card transactions. It will be within the discretion of the government to identify, via notification, the modes of electronic transactions and payments which will be exempt from the Merchant Discount Rate (MDR).

At present, the banks and the payment system operators are not allowed to charge the users for their payments via the use of UPI and RuPay debit cards. The UPI and Services Steering Committee chaired by the NPCI will decide on the MDR charge.

During the discussion on the bill in the House, the Finance Minister Nirmala Sitharaman said that the payments using UPI will continue to be free for users while the MDR charges will be levied on specific types of business transactions in the future.

The objective of the Taxation and Other Laws (Amendment) Act is to draw foreign capital and support domestic electronics manufacturing and use of Indian data centers by foreign cloud companies.

This Act replaces an ordinance issued on June 5, 2026, which exempted interest income and capital gains of foreign portfolio investors (FPIs) from income tax on investments in government securities.

The Act extends the income tax exemption available to foreign companies for contract manufacturing of electronic products in India until the financial year 2040-41. This includes mobile phones, laptops, personal computers, tablets, servers, and their key components and accessories.

The President Draupadi Murmu has given her assent to the bills amending the Taxation and Other Laws (Amendment) Act, 2026 and the Payment and Settlement Systems Act, 2007. Both bills have been approved by Parliament on 10th August.

The amendments to the Payment and Settlement Systems Act give the government a legal right to levy charges on UPI and RuPay card transactions. It will be within the discretion of the government to identify, via notification, the modes of electronic transactions and payments which will be exempt from the Merchant Discount Rate (MDR).

At present, the banks and the payment system operators are not allowed to charge the users for their payments via the use of UPI and RuPay debit cards. The UPI and Services Steering Committee chaired by the NPCI will decide on the MDR charge.

During the discussion on the bill in the House, the Finance Minister Nirmala Sitharaman said that the payments using UPI will continue to be free for users while the MDR charges will be levied on specific types of business transactions in the future.

The objective of the Taxation and Other Laws (Amendment) Act is to draw foreign capital and support domestic electronics manufacturing and use of Indian data centers by foreign cloud companies.

This Act replaces an ordinance issued on June 5, 2026, which exempted interest income and capital gains of foreign portfolio investors (FPIs) from income tax on investments in government securities.

The Act extends the income tax exemption available to foreign companies for contract manufacturing of electronic products in India until the financial year 2040-41. This includes mobile phones, laptops, personal computers, tablets, servers, and their key components and accessories.