Nasscom welcomes the Union Budget 2026 and acknowledges the Hon’ble Prime Minister Shri Narendra Modi and Hon’ble Finance Minister Smt. Nirmala Sitharaman for a forward-looking and consultative Budget that reinforces the partnership between government and industry. The Budget reflects a continued focus on ease of doing business and on strengthening India’s position as a global technology and services powerhouse under the Viksit Bharat vision, with technology positioned as a core driver of inclusive and sustainable growth.
A major positive for the technology industry is the rationalisation of the international taxation and transfer pricing framework, and the clear use of tax policy as a competitiveness lever. Nasscom welcomes the Budget’s alignment with long-standing industry priorities that we have consistently articulated through sustained engagement and consultation.
The consolidation of software development services, IT-enabled services, KPO and contract R&D relating to software development into a single category of Information Technology Services with a uniform safe harbour margin of 15.5 percent, together with the enhancement of the Safe Harbour eligibility threshold from INR 300 crore to INR 2,000 crore, materially expands access to certainty mechanisms for routine cross-border IT service models. Importantly, the proposal to move Safe Harbour approvals to an automated, rule-driven process without examination by tax officers, along with the option to apply the same Safe Harbour for a continuous five-year period, represents a decisive shift away from process-heavy compliance towards clarity, predictability and trust-based governance. This can significantly reduce recurring transfer pricing friction for GCCs as well as for other Indian IT and ITES providers operating eligible related-party arrangements.
Equally impactful is the strengthening of the Advance Pricing Agreement framework. The Budget’s proposal to fast track unilateral APAs for IT services, with an endeavour to conclude them within two years and a limited extension window, directly addresses long-standing concerns around timelines and access to certainty. The extension of the modified return facility to associated entities where income changes arise due to an APA is particularly relevant, as it supports smoother implementation of group-level outcomes and reduces the risk of residual disputes. Read alongside the expanded and automated Safe Harbour framework, these changes introduce a clearer tiering of certainty mechanisms, allowing routine cases to move onto rule-based tracks while enabling APAs, including renewals, to focus on genuinely complex matters. From an industry perspective, this is a practical step towards reducing friction, improving resource allocation within the tax system, and strengthening the credibility of India’s tax certainty framework at scale.
The Budget also makes an important intervention to strengthen India’s cloud and digital infrastructure ecosystem. The proposal for a tax holiday till 2047 for foreign companies providing cloud services to customers globally using data centre services from India, with services to Indian customers routed through an Indian reseller entity, sends a clear signal to attract long-term global investment and support the expansion of India’s compute capacity. The introduction of a 15 percent on-cost safe harbour for related-party data centre service providers provides pricing certainty for routine infrastructure services. On a broad reading, the combined design of these measures helps address long-standing interpretational challenges by clearly separating cloud service activity from data centre operations and aligning India’s taxing rights with arm’s length remuneration, thereby improving ease of doing business and investment confidence.
Nasscom also welcomes the continued emphasis on building domestic capability in strategic technologies. The launch of the India Semiconductor Mission 2.0 and the enhanced outlay of INR 40,000 crore for the Electronics Components Manufacturing Scheme represent an important push towards a resilient and globally competitive electronics and semiconductor ecosystem. On the broader ease of doing business agenda, the reduction in the mandatory pre-deposit for appeals from 20 percent to 10 percent of core tax demand and the proposal to allow updated returns even after reassessment proceedings have been initiated support resolution-based compliance and help reduce avoidable disputes.
Taken together, these measures reflect sustained, data-backed engagement by Nasscom and industry, and signal a more mature policy approach that places technology, digital infrastructure and tax certainty at the centre of India’s long-term competitiveness. Union Budget 2026 sets a clear direction by aligning policy certainty with digital and manufacturing capability, and Nasscom looks forward to working closely with the government to ensure effective implementation and translate this direction into durable outcomes for industry and the economy.