Union Budget 2026 proposes long-term tax holiday for foreign cloud firms using India data centres

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.

To improve efficiency in electronic manufacturing through just-in-time logistics, the Finance Minister proposed a safe harbour regime for non-residents undertaking component warehousing in bonded warehouses at a profit margin of 2% of the invoice value.

The resulting tax incidence of approximately 0.7% would be significantly lower than that in competing jurisdictions.

In a move to promote toll manufacturing in India, the Budget proposes a five-year income tax exemption for non-residents who provide capital goods, equipment, or tooling to toll manufacturers operating in bonded zones.

Further, the proposals include exemption of global (non-India sourced) income for non-resident experts for a period of five years under notified schemes. The measure aims to attract global talent and encourage longer professional engagements in India.

The Union Budget also proposes to exempt all non-residents paying tax on a presumptive basis from Minimum Alternate Tax (MAT).