Why in news
- President Droupadi Murmu granted assent to the Taxation and Other Laws (Amendment) Act, 2026, and the Payment and Settlement Systems (Amendment) Act, 2026.
Key points
- The Taxation and Other Laws (Amendment) Act, 2026 provides tax exemptions on interest income and capital gains for Foreign Portfolio Investors investing in Government Securities, replacing the June 2026 ordinance.
- The law provides regulatory certainty to foreign cloud service providers utilizing Indian data centres, aiming to boost domestic electronics manufacturing.
- The Payment and Settlement Systems (Amendment) Act, 2026 amends the parent 2007 legislation, empowering the Central Government to notify which digital payment modes remain exempt from charges.
- This gives statutory flexibility to modify or maintain the zero Merchant Discount Rate policy on Unified Payments Interface and RuPay debit card transactions.
Key terms
Merchant Discount Rate
The fee charged to a merchant by a bank for accepting payments through digital transactions.
Foreign Portfolio Investors
Passive investors holding foreign financial assets such as stocks and government securities in a domestic market.
Prelims facts
- The zero-MDR rule currently applies mandated free processing to UPI and RuPay debit card transactions.
- Tax exemptions on G-Sec returns for FPIs are aimed at deepening the sovereign bond market.
Mains discussion
- Discuss how regulatory certainty in digital payments balances consumer adoption with the financial sustainability of payment aggregators.
Source: Business Standard
Same topic · past papers
UPSC has asked this before
These previous-year questions sit on the same topic. Open one to practise the earlier ask.
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2025 · Q5(c) · PSIR GS 1 · 10 marks
Land reforms programmes led to some constitutional amendments. Comment -
2023 · Q34 · General Studies · 2 marks
In India, which one of the following Constitutional Amendments was widely believed to be enacted to overcome the judicial interpretations of the Fundamental Rights? -
2021 · Q6(a) · PSIR GS 1 · 20 marks
"Constitutionally reconciling the Fundamental Rights with the Directive Principles of State Policy has led to frequent amendments of the Constitution and judicial interventions." Comment -
2020 · Q2 · GS II · 10 marks
"Recent amendments to the Right to information Act will have profound impact on the autonomy and independence of the Information Commission". Discuss. -
2025 · Q68 · General Studies · 2 marks
Consider the following statements in respect of RTGS and NEFT : I. In RTGS, the settlement time is instantaneous while in case of NEFT, is takes some time to settle payments. II. In RTGS, the customer is charged for inward transactions while that is not the case for NEFT. III. Operating hours for RTGS are restricted on certain days while this is not true for NEFT. Which of the statements given above is/are correct?