What happened (Bill introduction in Lok Sabha)

Finance Minister Nirmala Sitharaman introduced the Taxation and Other Laws (Amendment) Bill, 2026 in the Lok Sabha. The proposed law seeks to amend multiple existing laws, including laws related to payment and settlement systems, income tax provisions, and finance law measures. The stated aim is to attract foreign investment and facilitate doing business in India, including support for the Make in India mission.

Background and earlier position (where the tax and compliance frictions existed)

The proposed amendments target three investor pain points described in the Bill’s stated objectives: data centre tax-exemption frictions for foreign cloud providers, taxation fears that could arise when global fund managers relocate their base to India, and dividend-exemption risk for investors in pooled real estate and infrastructure vehicles (REITs and InvITs).

1) Data centre tax exemptions and approval layers for foreign cloud companies

For foreign cloud companies using Indian data centres, the earlier structure of data centre-related tax exemptions involved clearing several governmental notification and approval layers before the exemption could be operational. These approval layers created a compliance friction for firms seeking the benefit.

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