FM Nirmala Sitharaman's Budget 2026-27 proposes a major tax holiday for foreign cloud firms using Indian data centres. It also includes safe harbour provisions for warehousing and tax exemptions to boost domestic and toll manufacturing.
New Delhi [India], February 1 (ANI): Recognising the need to enable critical infrastructure and boost investment in data centres, Finance Minister Nirmala Sitharaman has proposed to provide tax holiday till 2047 to any foreign company that provides cloud services to customers globally by using data centre services from India. It will, however, need to provide services to Indian customers through an Indian reseller entity, Finance Minister said, presenting the Budget for 2026-27 in the Parliament on Sunday. She also proposed to provide a safe harbour of 15 per cent on cost in case the company providing data centre services from India is a related entity.
Incentives for Manufacturing and Logistics
To harness the efficiency of just-in-time logistics for electronic manufacturing, she proposed to provide safe harbour to non-residents for component warehousing in a bonded warehouse at a profit margin of 2 percent of the invoice value. "The resultant tax of about 0.7 percent will be much lower than in competing jurisdictions," she asserted.
Further, to provide fillip to toll manufacturing in India, the Finance MInister proposed to provide exemption from income tax for 5 years, to any non-resident who provides capital goods, equipment or tooling, to any toll manufacturer in a bonded zone.
Presenting the Budget, Finance Minister Nirmala Sitharaman also announced a set of indirect tax measures in the Union Budget 2026-27, aimed at further simplifying the tariff structure, support domestic manufacturing, promote export competitiveness, and correct inversion in duty. Finance Minister Sitharaman presented her record ninth consecutive Union budget today in the Parliament.
Economic Survey and GDP Outlook
On Thursday, Union Finance Minister Nirmala Sitharaman tabled the Economic Survey of India in Parliament for the financial year 2025-26. The tabling of the Economic Survey ahead of the Budget follows the long-standing tradition of outlining the state of the economy before detailing future fiscal plans.
The document provided a comprehensive, data-backed review of the economy's performance over the previous year and offers a broad roadmap for future policy direction. As the government's flagship annual report, it reviews key economic developments over the past 12 months.
India's real GDP growth for 2026-27 is projected in the range of 6.8-7.2 per cent, reflecting sustained medium-term growth capacity amid a challenging global environment. (ANI)
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