According to Nasscom, the budget heralds India's IT moment with its push for AI and policy certainty

Union Budget Brings Big Tax Relief and Certainty for IT Industry, Says Nasscom

The technology industry has welcomed the Union Budget, calling it a major boost for India’s IT and digital services sector. Industry body Nasscom said the government’s move to simplify international taxation and transfer pricing rules will make it easier for tech companies to do business in India.

One key highlight is the merging of software services, IT-enabled services (ITES), KPO, and contract R&D into a single IT services category with a fixed safe harbour margin of 15.5%. The eligibility limit for safe harbour has also been increased from Rs 300 crore to Rs 2,000 crore, allowing more companies to benefit from tax certainty.

The government has also proposed an automated and rule-based approval process for Safe Harbour, reducing direct scrutiny by tax officers. Companies can now apply the same Safe Harbour rules for five years, which will lower compliance hassles and reduce tax disputes.

Additionally, the Advance Pricing Agreement (APA) process will be faster. Unilateral APAs for IT services are expected to be completed within two years, helping companies avoid long waiting periods. This move is aimed at providing quicker tax clarity and reducing legal complications.

The Budget also supports India’s digital infrastructure growth. A tax holiday until 2047 has been announced for foreign companies offering cloud services through Indian data centres. This is expected to attract global investments and strengthen India’s position as a global technology hub.

Nasscom said these reforms will improve ease of doing business, reduce tax friction, and help India grow as a global leader in technology and services.