The Income-tax (Amendment) Bill, 2026 has been listed on the government’s legislative agenda for the Monsoon Session of Parliament. It seeks to replace the Income-tax (Amendment) Ordinance, 2026. The Bill proposes income-tax exemptions for certain Foreign Institutional Investors (FIIs) and the Bank for International Settlements (BIS) on income earned from specified government securities.
The Bill should not be confused with the Income-tax Act, 2025. The 2025 Act is India’s new income-tax law. It replaced the Income-tax Act, 1961 and came into force on 1 April 2026.
How Is It Different from the Income-tax Act, 2025?
The Income-tax Act, 2025 is a comprehensive law. It replaced the six-decade-old Income-tax Act, 1961. Its objective was to simplify tax provisions, modernise legal language and make compliance easier. It did not introduce a major overhaul of tax rates.
The Income-tax (Amendment) Bill, 2026, however, is not a new tax law. It proposes limited changes to the existing Act. Its purpose is to address specific policy issues instead of rewriting the entire legislation.
Why Was the Amendment Needed?
The Bill seeks to replace the Income-tax (Amendment) Ordinance, 2026. Its key proposal is to grant income-tax exemptions to certain FIIs and the BIS on income earned from specified government securities.
According to the government, the measure aims to attract stable long-term foreign investment into India’s sovereign debt market.
What Are the Government’s Objectives?
The government expects the amendment to deepen the government bond market and improve liquidity. It also aims to strengthen financial stability by encouraging greater participation from global investors.
The proposal comes at a time of global economic uncertainty, rising crude oil prices and geopolitical tensions. The government believes a stable flow of foreign capital can support the Indian economy during this period.
Why Is It Important?
The Bill is expected to remain an important issue in Parliament because it reflects the government’s strategy to strengthen financial markets and attract foreign investment.
However, the proposal may also trigger debate.
Critics may question whether tax exemptions for foreign investors are justified and what impact they could have on government revenue. Supporters argue that the measure could improve investor confidence and strengthen India’s sovereign debt market.
 Bill, 2026, its objectives, proposed tax exemptions for FIIs and BIS, and how it differs from the Income-tax Act, 2025.){kind=link}