Budget 2026–27 Rolls Out Major Tax Incentives to Attract Global Business and Investment

Feb 2026 : The Union Budget 2026–27 has unveiled a series of far-reaching tax incentives aimed at positioning India as a preferred global destination for business, investment, and digital services. Presenting the Budget in Parliament, Union Finance and Corporate Affairs Minister Nirmala Sitharaman outlined measures designed to enhance India’s competitiveness, particularly in data centres, cloud services, manufacturing, and global talent mobility.

A major highlight of the Budget is the tax holiday extended till 2047 for foreign companies that provide cloud services to customers worldwide using data centre infrastructure located in India. This move is expected to significantly boost investments in India’s data centre ecosystem, encouraging global technology firms to establish and expand operations in the country while leveraging India’s growing digital infrastructure.

To provide certainty and reduce tax disputes, the government has announced a safe harbour margin of 15 percent on cost for companies providing data centre services from India when the service provider is a related entity. Additionally, non-resident companies engaged in component warehousing through bonded warehouses will be eligible for a safe harbour profit margin of 2 percent of invoice value. According to the Finance Minister, the resulting effective tax rate of around 0.7 percent is substantially lower than that offered by competing global jurisdictions, making India an attractive logistics and supply-chain hub.

The Budget also proposes a five-year income tax exemption for non-residents supplying capital goods, equipment, or tooling to toll manufacturers operating in bonded zones. This measure is aimed at strengthening domestic manufacturing, easing access to advanced machinery, and integrating Indian industry more deeply into global value chains.

Recognising the importance of global expertise, the Budget introduces incentives to attract and retain highly skilled professionals. Under notified schemes, non-resident experts will receive an exemption on their global (non-India sourced) income for a stay period of up to five years. This step is intended to encourage top international talent to work in India for longer durations, supporting innovation, knowledge transfer, and capacity building.

In another significant relief, the government has proposed to exempt all non-residents who pay tax on a presumptive basis from Minimum Alternate Tax (MAT). This move is expected to simplify tax compliance and further enhance India’s appeal as a stable and predictable investment destination.

Collectively, these measures reflect the government’s strategic intent to attract global businesses, strengthen investor confidence, and firmly establish India as a competitive hub in the global economy under Budget 2026–27.