Analysis of the Taxation and Other Laws (Amendment) Bill, 2026
The Taxation and Other Laws (Amendment) Bill, 2026 was introduced on August 4, 2026, and passed by the Lok Sabha on August 7, 2026. The text of the Bill is available here. Among other changes, the Bill amends Section 10A of the Payment and Settlement Systems Act, 2007.
The wording of Section 10A is changed from “the electronic modes of payment prescribed under section 269SU of the Income-tax Act, 1961” to “one or more electronic modes of payment as the Central Government may, by notification, specify”. The prohibition on charges itself is not being removed, but what is changing is how the electronic payment modes protected by that prohibition are determined.
The Bill therefore retains the statutory prohibition while making the list of protected payment modes dependent on Central Government notification. This introduces significantly greater executive discretion under the rationale of flexibility, without prescribing explicit criteria for the inclusion or exclusion of payment modes. Indian courts generally permit Parliament to delegate implementation details to the executive, but this raises an important question that deserved scrutiny. Does the Bill provide sufficient guidance on how the government should exercise this power? For instance, what would constitute a rational basis for including one payment mode while excluding another? Such executive action would still be subject to constitutional constraints, including Article 14 and judicial review, but those safeguards operate after executive action has been taken rather than substituting for legislative scrutiny in the first place.
This institutional shift becomes more significant when viewed alongside the manner in which the Bill was passed. There was no recorded substantive legislative debate on the Bill in the Lok Sabha, and it was passed by voice vote, meaning that no numerical Aye versus Nay tally was produced. There was also no substantive clause-by-clause discussion, as opposition members were protesting and raising slogans over unrelated issues. Consequently, questions that could have clarified the scope of this delegation were left largely unexplored. For example, why is the power to notify protected payment modes vested in the Central Government rather than the RBI, despite the RBI’s role as the principal regulator of payment systems? What criteria will govern these notifications? Could UPI or another currently protected payment mode simply be excluded from a future notification?
Passing legislation in this manner is constitutionally valid, as the constitution does not prescribe a minimum amount of debate that must precede the passage of an ordinary Bill. But constitutional validity and good parliamentary practice are not the same thing. Parliamentary debate provides an opportunity to scrutinise delegated powers, question ministers, expose potential drafting problems and establish a legislative record explaining Parliament’s intent. A detailed discussion could have clarified whether the government’s intention was merely to decouple Section 10A from the Income-tax Act or also to create a mechanism through which the scope of protected payment modes could be changed more easily in the future.
The consequence of this bill is a meaningful shift in institutional responsibility. Previously, the scope of Section 10A’s protection was anchored by Parliament to payment modes prescribed under Section 269SU of the Income-tax Act. After the amendment, the Executive can determine, through notification, which electronic payment modes fall within Section 10A’s prohibition without requiring Parliament to amend the Act again. Administrative flexibility may be a legitimate objective, particularly in a rapidly evolving payments ecosystem, but granting that flexibility without clearly articulated statutory criteria and doing so without substantive parliamentary debate raises legitimate concerns about legislative scrutiny, executive discretion and accountability.