Blitz India Business
NEW DELHI: Parliament passed the Taxation and Other Laws (Amendment) Bill on Tuesday. The headline is ease of doing business. The provision that will actually move money is a reduction in the number of conditions an offshore fund manager must satisfy to work from India — from 13 to 5.
The Rajya Sabha returned the Money Bill to the Lok Sabha after discussion on Tuesday, completing its passage; the Lok Sabha had passed it on August 6. Inside it sits a set of amendments aimed at four constituencies at once. The fund management regime is simplified by cutting compliance conditions from 13 to five, retaining core safeguards, with the stated objective of promoting fund management activity in India and providing tax certainty. Tax incentives for electronics manufacturing are extended to 2041 and widened to cover laptops and wearables. Eligible foreign diamond mining companies, sight holders, brokers, aggregators and auction entities get exemptions until March 31, 2041 on income from the sale of rough diamonds through notified special zones. Foreign investors in government securities receive fresh exemptions, and the Payment and Settlement Systems Act, 2007 is amended to remove cross-references to the Income-tax Act in provisions on electronic payment modes.
Where the fund manager sits: the money can be domiciled anywhere. The question this amendment addresses is whether the person deciding what to do with it may sit in India.
A fund manager does not relocate for a lower rate. They relocate for certainty — and thirteen conditions is a lot of ways to be uncertain.
At a Glance
• Bill: Taxation and Other Laws (Amendment) Bill, 2026
• Passed: Lok Sabha August 6; Rajya Sabha returned the Money Bill August 11
• Fund managers: compliance conditions cut from 13 to 5
• Stated aim: promote fund management activity in India; provide tax certainty
• Electronics: manufacturing incentives extended to 2041
• Scope widened to: laptops and wearables
• Diamonds: exemptions to March 31, 2041 for rough-diamond sales in notified special zones
• Business trusts: SPV surcharge raised to 25 per cent; a restriction on unit-holder dividend exemption removed
• Also amended: Payment and Settlement Systems Act, 2007
The fund-management provision addresses a specific and long-standing friction. Under the safe-harbour framework, an offshore fund could be taxed in India merely because the person managing it was physically located here — which meant an Indian manager running global money had a strong incentive to run it from Singapore or Dubai instead. The safe harbour existed to remove that risk, but the conditions attached to it were numerous and, in practice, difficult to satisfy continuously; a regime whose protection can lapse if any one of thirteen tests fails in any year is a regime that a compliance officer will advise against relying on. Cutting the tests to five while keeping the core safeguards is therefore less a giveaway than a repair. The intended effect is on where a job sits, not on where a rupee of tax sits — and the jobs in question are the highest-paid in Indian financial services.
Read the other provisions together and a pattern emerges: each targets an activity that is internationally mobile and currently done elsewhere. Rough diamond trading is the clearest case — India cuts and polishes the overwhelming majority of the world’s diamonds but the rough stones have historically been bought at auction in Antwerp and Dubai, so the value of the transaction accrues abroad while the value of the labour accrues here; an exemption running to 2041 is an attempt to move the transaction to the labour. The electronics extension to 2041, covering laptops and wearables, is the fiscal companion to the ₹62,500-crore mobile phone manufacturing scheme approved in July and extends the same logic to adjacent categories. The business trust changes tidy up an anomaly that had denied dividend exemption to unit holders where the special purpose vehicle had opted into the new tax regime — a technicality that had been discouraging REIT and InvIT structures for no policy reason. None of these is a large revenue item on its own. Collectively they are a bet that certainty attracts more activity than concessions do, and that the activity, once here, stays. The measure of success will not be visible in a budget document; it will be visible in the number of fund managers who file their taxes in Gandhinagar rather than Singapore three years from now.