NASSCOM Urges Budget 2026: Expand ESOP Tax Deferment, Clarify Cloud Tax

• NASSCOM seeks to extend ESOP tax deferment to more startups in Budget 2026, currently limited by Inter-Ministerial Board Certification.
• The industry body requests clarity on tax concerns for foreign cloud services used by Indian data centers, proposing that availing hosting from Indian data centers should not constitute a business connection for foreign providers.
• NASSCOM suggests extending carry-forward of losses and unabsorbed depreciation benefits to all companies during mergers, regardless of business type.
• Proposals include expanding SEZ reinvestment reserve uses to cover leased tech assets, cloud infrastructure, software subscriptions, and recruitment/training for authorized operations.
• The industry is navigating challenging times, with growth slowing despite nearing USD 300 billion, while AI and the domestic market present new opportunities.

Why It Matters: NASSCOM urges Budget 2026 to support startups and tech growth by easing ESOP taxes and clarifying cloud taxation.