Budget 2026: FM Proposes Tax Holiday for Foreign Cloud Firms, Boosts Data Centers

• Finance Minister Nirmala Sitharaman proposed a tax holiday until 2047 for foreign cloud service providers operating through Indian resellers.
• The initiative aims to reduce tax friction for global cloud players and encourage local distribution, aligning with India's domestic market structure.
• A 15% safe harbour on cost was proposed for related entities providing data centre services from India, enhancing efficiency for electronic manufacturing.
• Non-residents supplying capital goods to toll manufacturers in bonded zones will receive a five-year income tax exemption.
• Measures to attract global talent include exempting non-India-sourced income for non-resident experts for five years and MAT exemption for non-residents paying presumptive tax.

Why It Matters: Budget 2026 introduces significant tax incentives to attract foreign cloud firms, boost data centers, and scale manufacturing.