From Mobiles to Diamonds...These Are the New Tax Rules

The Taxation and Other Laws (Amendment) Act, 2026 received Presidential assent on August 17, 2026. The legislation amends the Payment and Settlement Systems Act, the Income tax Act and the Finance Act. It opens the way for a possible Merchant Discount Rate (MDR) on UPI transactions, although no MDR has been introduced yet and the rates have not been decided. The government has assured that UPI will remain free for consumers and small businesses, while any potential MDR could be limited and selective for certain merchant transactions.

The amendment also extends the tax incentive period for electronics manufacturing from FY2030-31 to FY2040-41. The benefit framework covers products such as mobile phones, laptops, PCs, tablets, servers, wearables and hearables, among other electronic goods. In another major move, tax relief for the rough diamond trade will take effect from October 1, 2026, providing a significant boost to the diamond sector.