Budget offers tax holiday for global cloud firms using Indian data centres

The Union Budget on Sunday proposed a tax holiday till 2047 for foreign companies that provide cloud services to customers globally using data centres located in India, signalling the Government’s push to make the country a major hub for AI and digital infrastructure.

The big push on data centres comes at a time when India is gearing up to take the centrestage in global discourse on Artificial Intelligence. It is expected to position India not just as a consumer of global cloud and AI services, but as a thriving base for the world’s digital backbone.

By linking tax benefits to serving global customers from India, the policy seeks to turn the country into an export hub for cloud computing. Presenting the Union Budget 2026-27, Finance Minister Nirmala Sitharaman said, “Recognising the need to enable critical infrastructure and boost investment in data centres, I propose to provide a tax holiday till 2047 to any foreign company that provides cloud services to customers globally by using data centre services from India.”

It will, however, need to provide services to Indian customers through an Indian reseller entity.

“I also propose to provide a safe harbour of 15 per cent on cost in case the company providing data centre services from India is a related entity,” the FM said.