Overview
- The 2026–27 Budget exempts foreign companies’ income from global cloud services run via specified Indian data centres from tax until 2047, subject to qualifying conditions.
- Eligibility requires the physical facilities to be owned and operated by an Indian company notified under a MeitY scheme, with foreign firms barred from owning or managing the designated infrastructure.
- Sales to customers in India must be routed through an Indian reseller that remains taxable, with a 15% safe‑harbour margin on related‑party data‑centre services and a 2% fixed margin for bonded component warehousing.
- Sources say domestic operators such as Nxtra, CtrlS, Yotta and AdaniConneX stand to gain through higher demand and pricing power, though their profits remain subject to standard corporate tax.
- Advisers say the policy reduces permanent‑establishment and transfer‑pricing disputes, while critics warn that power, water, land and approval bottlenecks—and the need for parity and guardrails—will determine real outcomes, with detailed rules still to be issued.