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Andrew Bonwick
Vice President of Product Development at Relm Insurance
Madhav Sheth
CEO of Ai+ Smartphone
Stephen Rose
CEO Render Networks
Finance Minister Nirmala Sitharaman has proposed a tax holiday until 2047 for foreign companies that deliver cloud services to global customers through data centres located in India. The announcement came during the Union Budget 2026 – 27 speech in the Lok Sabha. Alongside this, related entities providing data-centre services from India can opt for a safe-harbour tax of 15% on cost, aimed at offering clarity and reducing tax disputes.
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The proposal allows foreign cloud providers serving global users to anchor their infrastructure in India and receive tax benefits on eligible income linked to those services. The safe harbour rule replaces case by case tax assessments with a fixed margin approach.
Provision of tax holidays until 2047 to foreign companies providing cloud services to global customers through India-based data centre services. Related Entities providing data center services from India to get a safe-harbour of 15% on cost, the Budget at a Glance document said, highlighting the tax reforms aimed at boosting the services sector.
The 21 year horizon is significant for an industry that requires high upfront investment in land, power, cooling, and fibre connectivity. Data-centre location decisions are long-term, and the government’s message is that India is ready to host such infrastructure for decades. The timing aligns with rising global demand for compute and storage driven by artificial intelligence, growing focus on data residency, and the need for trusted geographies to host digital infrastructure.
Also Read: OpenAI is Planning a Data Center in India with 1 Gigawatt Capacity: Report
