Tax amendment bill a positive step for data centre ecosystem: Nasscom
New Delhi, Aug 4
Industry on Tuesday hailed the Taxation and Other Laws Bill, 2026, which proposes to simplify the tax exemption framework introduced under the Finance Act, 2026 for foreign companies procuring services from specified data centres in India.
The Bill removes the need for case-specific notifications for both foreign companies and data centres, while also recognising data centre facilities operated through ownership or leasing.
"While the Bill is currently before Parliament, the proposed changes is a positive step for the industry," Nasscom said in a statement.
The revised proposal would help foreign cloud service providers and other foreign companies with workloads in India, including groups with GCC operations.
Their models may involve group entities, overseas resellers, Indian reseller arrangements, and cross border customer servicing. Removing foreign company notification reduces the risk that tax certainty depends on the entity named in an approval. The better test is whether the statutory conditions are met.
The industry chamber said it has been strongly advocating that the framework should remain grounded as a tax certainty enabler and not become an approval heavy scheme, or a route to impose wider investment, capacity, or sourcing conditions unrelated to the tax question.
"It also helps Indian data centre companies, as removing data centre notification reduces avoidable approval burden on the facility, while making Indian operated infrastructure easier for global customers to use," said Nasscom, adding that the shift from an approval-based process to a condition-based regime would be a positive step.
The Bill seeks to amend the Income-tax Act, 2025, the Finance Act, 2026 and the Payment and Settlement Systems Act, 2007.
One of the key proposals seeks to simplify the tax framework governing eligible offshore investment funds and eligible fund managers by reducing compliance requirements while retaining core safeguards. The Bill also proposes fresh tax exemptions for foreign investors in government securities.
— IANS
Reader Comments
This is a sensible reform. Removing case-specific notifications will save so much time for companies operating here. It's good to see the government listening to industry experts like Nasscom. However, I hope the compliance checks remain stringent enough to prevent misuse.
Great news for the data centre ecosystem! As a startup founder, I've seen how unclear tax frameworks can deter foreign investments. This move will boost our digital infrastructure story. Kudos to Nasscom for advocating on behalf of the industry. 🇮🇳
Good to see India simplifying its tax regime for foreign companies. This will make it easier for MNCs to set up cloud infrastructure in the country. The recognition of leased facilities is also a positive step. Encouraging for the overall digital economy.
While I appreciate the intent, I wish the government would focus more on simplifying GST for data centres too. This is a good start, but let's not forget the broader tax structure. Still, any step towards reducing approval burdens is welcome. 🤔
This is a step in the right direction for 'Digital India'. More data centres in India means better data sovereignty and potentially lower latency for users. Hope this encourages more global players to set up shop here. The future is bright! 🌟
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