Budget Sharpens Tax Certainty for Sector, Nasscom Says
Transfer pricing overhaul and cloud incentives signal a push to reduce disputes and attract long-term digital infrastructure investment, says industry lobby
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India’s Union Budget 2026 sharpened tax certainty for technology services, with industry lobby Nasscom backing changes to transfer pricing rules and dispute-resolution mechanisms that affect cross-border IT work.
In a statement on Sunday, Nasscom welcomed the consolidation of software development, IT-enabled services, KPO and software-linked contract R&D into a single Information Technology Services category, alongside a uniform 15.5% safe harbor margin. It also flagged the expansion of the safe harbour eligibility threshold to ₹2,000 crore from ₹300 crore.
The association supported proposals to fast-track unilateral Advance Pricing Agreements for IT services, target faster timelines, and automate safe harbor approvals, saying the changes should reduce routine transfer pricing disputes for exporters and global capability centers.
It also endorsed incentives for digital infrastructure, including a tax holiday for foreign cloud companies operating through Indian data centers and a 15% on-cost safe harbor for related-party data center services, and said it would engage with the government on implementation.
