India, Feb. 1 -- Recognising the need to strengthen critical digital infrastructure and attract global investment in data centres, Finance and Corporate Affairs Minister Nirmala Sitharaman, while presenting the Union Budget 2026-27 in Parliament on Sunday, proposed a tax holiday until 2047 for foreign companies providing cloud services globally using data centre infrastructure located in India.

However, such companies will be required to service Indian customers through an Indian reseller entity, the Ministry of Finance said. The Budget also proposes a safe harbour margin of 15% on cost where the data centre service provider in India is a related entity.

The resulting tax incidence of approximately 0.7% would be significantly lower than...