Tax Holiday Until 2047 for Foreign Cloud Companies Using Indian Data Centres, what Budget 2026 offers and the conditions.

• The foreign company provides cloud services to customers globally using data centre services procured from India.
• The data centre services come from an Indian company operating a data centre in India.
• Sales to Indian customers are made through an Indian reseller entity, which is taxed in India normally.
• The foreign company is notified under the relevant provisions.
• Related-party Indian data centres operating on cost-plus can use a 15% margin on cost as a safe harbour.

Foreign cloud providers have been cautious about putting large infrastructure in India because of the risk that it creates a permanent establishment and exposes global cloud income to Indian tax. The holiday removes that cost for the specified income, while keeping the Indian data centre operator and the Indian reseller fully taxable.

• Whether your Indian data centre arrangement meets the conditions and notification requirements.
• Reseller structure for Indian customers: contracts, pricing, GST on supplies to Indian customers and transfer pricing.
• Transfer pricing for a related Indian data centre: whether to use the 15% safe harbour.
• Permanent establishment exposure for other activities in India not covered by the holiday.
• Separately, Budget 2026 announced a single IT services safe harbour (15.5% margin) with the eligibility threshold raised from INR 300 crore to INR 2,000 crore.

Sources: Business Today; Outlook Business; Takshashila Institution.

Last updated: 30 October 2026. Based on Budget announcements; check the enacted Finance Act 2026 provisions and notifications for the final conditions.