Budget 2026: Big Push for Data Centres and Simpler Tax for GCC Growth
To boost critical infrastructure and data centre investment, foreign cloud firms using Indian facilities will get a tax holiday until 2047 via local resellers.
The Union Budget 2026 proposed a tax holiday until 2047 for any foreign company that provides cloud services to customers globally using data centre services from India.
“Recognising the need to enable critical infrastructure and boost investment in data centres, I propose to provide a tax holiday until 2047 to any foreign company that provides cloud services to customers globally using data centre services from India. However, it will need to provide services to Indian customers through an Indian reseller entity,” Finance Minister Nirmala Sitharaman said on Sunday as part of her speech.
The finance minister also proposed providing a safe harbour of 15 per cent on costs in cases where the company providing data centre services from India is a related entity.
In a post-Budget press briefing, Minister of Electronics and Information Technology Ashwini Vaishnaw said: “Work on the $70 billion investment that has been committed in India for the setting up of data centres has already begun. At present, the total investment announced is $90 billion. The tax holiday until 2047 that has been announced today will help India get included in the list of countries that have large artificial intelligence (AI) data centre hubs.”
In another move intended to benefit the IT sector, particularly global capability centres (GCCs), the government has raised the threshold for availing safe harbour for IT services to ₹2,000 crore from ₹300 crore.
The finance minister also clubbed software development services, IT-enabled services, knowledge process outsourcing (KPO) services, and contract research and development (R&D) services under “information technology services”, with a common safe harbour margin of 15.5 per cent for all.
