What happened: Taxation and Other Laws (Amendment) Bill, 2026 introduced in Lok Sabha

The Finance Minister introduced the Taxation and Other Laws (Amendment) Bill, 2026 in the Lok Sabha. The Bill proposes amendments to multiple Indian statutes, including the Payment and Settlement Systems Act, the Income-tax Act, and the Finance Act, with a stated aim of improving the investment and business environment.

The Bill’s reported focus areas are: (1) a tax exemption for data centres in India (including for foreign cloud companies that use Indian data centres); (2) removal of approval-linked conditions tied to the incentive; (3) permission for data-centre operations on a leased basis; and (4) changes in taxation of investor dividends in REITs and InvITs when operating companies shift tax regimes.

Background and earlier position: conditional incentives and investor uncertainty

Earlier provisions tied access to data-centre tax exemptions to multiple layers of governmental notifications and approvals. These layered approvals reportedly created compliance friction for entities seeking to use the exemption.

For REITs and InvITs, dividend tax-free treatment reportedly existed only under an older tax regime when the operating company stayed in that older regime. When operating companies shifted to a new tax regime, investors reportedly risked losing the dividend exemption benefit. The Bill proposes to restore the dividend exemption benefit.

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