What Are The Provisions In The Bill?
According to the bill, if a foreign company supplies machinery and other components to an Indian factory for the manufacturing of electronic items, the income generated by the Indian company from this manufacturing will now be tax-free for 15 years. This was originally proposed for five years, but after consultation with stakeholders, this period has been extended by another ten years.
Mobile Phones, Laptops, And Tablets To Become Cheaper
According to the Income Tax Department, the income of such Indian companies will now be tax-free until the financial year 2040-41. The department has also clarified that the exemptions on income cover the manufacturing of electronic items, including mobile phones, laptops, personal computers, tablets, servers, and their key parts.
Another tax change is proposed to encourage electronic manufacturing. Currently, foreign companies supplying components to Indian electronics manufacturing companies store them in warehouses near their units so that the production of the companies manufacturing for them is not affected. The government levies a two per cent tax on this. Now, these have also been exempted from tax for the next fifteen years. This will encourage foreign companies to source manufacturing from Indian companies.
Attempt To Attract Global Fund Managers
Changes are also being made in the bill related to amending the tax law to encourage global fund managers to come and work in India. According to the proposal, currently, if a global fund manager comes to India to conduct business, they must comply with several conditions. Now all those conditions are being removed. The only thing that will be taken into account is that their funds are not misused by Indians.
The government introduced the Taxation and Other Laws (Amendment) Bill, 2026 in the Lok Sabha on August 4, 2026. Rather than directly cutting retail sales taxes (like GST) on individual devices at the counter, the bill provides long-term tax relief and incentives for electronics manufacturers and contract suppliers.
Key Provisions of the Bill
Extension of Tax Relief to 2041:
The bill extends a 10-year tax exemption (until March 31, 2041) for foreign companies supplying capital goods, machinery, equipment, tooling, and components to contract manufacturers in India.
Expanded Scope of Electronic Goods:
The definition of "specified electronic goods" covered under tax incentives has been significantly widened.
It now includes: Mobile phones and smartphones
Laptops, tablets, and personal computers
Servers and related networking sub-assemblies
Hearables, wearables (smartwatches/fitness trackers), and related accessories
Customs Bonded Warehouses Exemption:
Foreign entities storing electronic sub-assemblies and components in customs bonded warehouses within India will receive tax exemptions through FY2040–41, helping insulate local assembly units from global supply chain disruptions.
Data Centre Tax Easing:
Tax compliance and operational requirements for foreign companies using Indian data centres (including leased facilities) have been streamlined, reducing compute and infrastructure costs.
How This Affects Consumer Prices
| Direct vs. Indirect Impact | Operational Change | Expected Price Effect |
| Component Costs | Extended tax exemptions lower import and operational duties on specialized tooling and sub-assemblies. | Lower cost per unit for local manufacturers. |
| Local Manufacturing (Make in India) | Encourages global component suppliers to set up operations within India for the long term. | Reduces reliance on imported parts subject to volatile tariffs. |
| Retail Shelf Impact | Brands can pass on capital savings to consumers in competitive price bands (e.g., mid-range smartphones and laptops). | Gradual price drops or higher spec offerings at current price points. |
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