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 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.
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.
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
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2018 · Q6 · General Studies · 2 marks
Which one of the following best describes the term "Merchant Discount Rate" sometimes seen in news? -
2019 · Q67 · General Studies · 2 marks
Which of the following is issued by registered foreign portfolio investors to overseas investors who want to be part of Indian stock market without registering themselves directly? -
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