Union Finance Minister Nirmala Sitharaman on Tuesday tabled the Taxation and Other Laws (Amendment) Bill, 2026 in the Lok Sabha, proposing a slew of changes to tax laws and the payments framework, including a provision barring banks and payment system providers from levying charges on certain electronic payment modes notified by the Centre.The Bill seeks to amend the Payment and Settlement Systems Act, 2007, the Income-tax Act, 2025, and the Finance Act, 2026, and will replace the Income-tax (Amendment) Ordinance, 2026.Also Read: Taxation laws amendment bill tabled in Lok Sabha: What the new tax bill changes for foreign investorsOne of the key proposals aims to promote digital payments. According to the Bill, "no bank or system provider shall impose, whether directly or indirectly, any charge upon a person making or receiving a payment by using one or more electronic modes of payment as may be notified by the Central Government."The legislation also proposes a series of tax measures spanning foreign investment, electronics manufacturing, fund management, data centres, the diamond industry and business trusts.To encourage investment in government securities, the Bill proposes exempting Foreign Institutional Investors (FIIs) from tax on interest income and capital gains arising from investments in government securities. A similar exemption has also been proposed for the Bank for International Settlements (BIS) on its investments in government securities.The government has also proposed simplifying the tax framework for Eligible Investment Funds and Fund Managers to boost fund management activity and provide greater tax certainty.As part of its push to strengthen India's electronics manufacturing ecosystem, the Bill proposes extending the tax exemption for contract manufacturing until FY2040-41. It also seeks to classify mobile phones, laptops, tablets, servers, wearables and related components as "Specified Electronic Goods." Foreign companies storing such electronic components in customs bonded warehouses would also be eligible for tax relief until FY2040-41 under the proposal.The Bill further proposes relaxing tax rules for leased data centres operated by Indian companies, providing relief to the digital infrastructure sector.Also Read: Govt cuts ₹16,688 crore in tax disputes after appeal threshold hikeFor the diamond industry, it proposes extending the tax exemption on rough diamond sales until March 31, 2041, for foreign mining companies, sightholders, brokers and auction or tender companies.It also seeks to ease tax exemption conditions for dividends received by unit holders of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) through business trusts.On corporate taxation, the proposed legislation increases the surcharge from 10% to 25% for Special Purpose Vehicles (SPVs) opting for the new tax regime, while retaining the surcharge at 10% for other domestic companies.