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Budget 2026: All IT segments clubbed as ‘IT Services’, safe harbour raised to Rs 2,000 crore
Finance Minister Nirmala Sitharaman announces a single “Information Technology Services” category, a 15.5% safe harbour margin, and a higher Rs 2,000 crore threshold in Union Budget 2026–27.
Union Finance Minister Nirmala Sitharaman on Sunday highlighted India’s position as a global leader in software development services, IT-enabled services, knowledge process outsourcing, and contract research and development.
Presenting the Union Budget 2026–27 in Parliament, she announced that all these segments will be clubbed under a single category named “Information Technology Services”.
“India is recognised as a global leader in software development services, IT-enabled services, knowledge process outsourcing, and contract R&D services. All these segments will be clubbed under a single category called Information Technology Services,” Sitharaman said.
Common safe harbour margin for IT services
The Finance Minister announced a common safe harbour margin of 15.5 per cent for all IT services. She also said that the threshold for availing the safe harbour provision will be increased from Rs 300 crore to Rs 2,000 crore.
“A common safe harbour margin of 15.5 per cent will apply to all IT services. The threshold for availing safe harbour has been increased from Rs 300 crore to Rs 2,000 crore,” she said.
Automated safe harbour approvals
Sitharaman further stated that safe harbour approvals for IT services will be processed through an automated, rule-driven system, eliminating the need for examination by tax officers.
Measures to support IT services and global investment
The Union Budget also introduced measures to support IT services and attract global investment. For companies opting for Advanced Pricing Agreements (APAs), the processing time will be reduced to two years, with a possible six-month extension.
In addition, the facility of modified returns will be extended to associated entities entering into an APA.
Tax holiday for cloud services using Indian data centres
To promote investment in digital infrastructure, the Finance Minister announced a tax holiday until 2047 for foreign companies providing cloud services globally using data centres located in India.
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