NewKerala.com

Budget 2026 Unifies IT Services, Boosts Tax Certainty for Global Giants

Finance Minister Nirmala Sitharaman, presenting the Union Budget 2026-27, consolidated various IT segments under a single 'Information Technology Services' category. She announced a common safe harbour margin of 15.5% and significantly increased the eligibility threshold to ₹2000 crore to reduce litigation. The budget also aims to attract global investment by offering a tax holiday until 2047 for foreign companies providing cloud services via Indian data centres. Further measures include faster processing for Advanced Pricing Agreements and an automated system for safe harbour approvals.

Key Points: Budget 2026: IT Services Unified, Tax Certainty Boosted

  • Single 'IT Services' category created
  • Common 15.5% safe harbour margin
  • Safe harbour threshold raised to ₹2000 crore
  • Tax holiday for foreign cloud firms until 2047
  • APA processing time reduced to two years
2 min read

Union Budget: Govt brings IT services under single category, boosts tax certainty

FM Sitharaman announces single 'IT Services' category, 15.5% safe harbour margin, and tax holiday for foreign cloud firms using Indian data centres.

"India is recognised as a global leader in software development services, IT-enabled services, knowledge process outsourcing, and contract R&D services. - Nirmala Sitharaman"

New Delhi, February 1

Union Finance Minister Nirmala Sitharaman on Sunday highlighted India's position as a global leader in software development services, IT-enabled services, knowledge process outsourcing and contract research and development.

Presenting the Union Budget 2026-27 in Parliament today, Sitharaman announced that these segments will be brought under a single category named "Information Technology Services".

"India is recognised as a global leader in software development services, IT-enabled services, knowledge process outsourcing, and contract R&D services. All these segments to be clubbed under a single category called Information Technology Services," Sitharaman said.

She further announced a common safe harbour margin of 15.5 per cent for all IT services. The threshold for availing the safe harbour provision will be increased from Rs 300 crore to Rs 2,000 crore.

"A common safe harbour margin of 15.5% will apply to all IT services. Threshold for availing safe harbour increased from ₹300 crore to ₹2,000 crore. Safe harbour approvals for IT services will be processed via an automated, rule-driven system, removing the need for examination by tax officers," she said.

The Union Budget also introduced measures to support IT services and attract global investment. For companies opting for Advanced Pricing Agreements (APA), the processing time will be reduced to two years, with a possible six-month extension. The facility of modified returns will also be extended to associated entities entering into an APA.

To promote investment in digital infrastructure, Sitharaman announced a tax holiday until 2047 for foreign companies providing cloud services globally using data centres located in India.

- ANI

Share this article:

Reader Comments

P
Priya S
As someone working in a KPO, this clarity is much needed. Having a single category 'IT Services' will make things simpler for clients and for us when dealing with contracts and taxation. Hope this boosts investor confidence.
R
Rohit P
The tax holiday for cloud services until 2047 is a visionary move to make India a global data hub. Attracting foreign investment in data centres is crucial for our digital infrastructure. Good thinking for the long term!
S
Sarah B
While the simplification is good, I hope the common 15.5% safe harbour margin is fair for all sub-segments. Sometimes a one-size-fits-all approach can disadvantage niche players like smaller R&D firms. The intent is positive though.
V
Vikram M
Reducing APA processing time to two years is a big relief. The uncertainty in transfer pricing was a major pain point for MNCs. This budget seems to be listening to the industry's feedback. Thumbs up!
K
Karthik V
Automation of tax approvals is the key takeaway. Removing the need for examination by officers reduces discretion and potential harassment. This is a solid step for transparency. Hope other sectors get similar treatment.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Minimum 50 characters 0/50