Tax holiday for data centres enthuses IT business leaders

2 FEBRUARY 2026

The Union Budget signalled a strategic shift toward institutionalised innovation by aggressively lowering regulatory barriers and strategically re-engineering India’s fiscal framework to establish the nation as the definitive global hub for data, technology, and innovation, said industry experts and analysts.
Expanding the safe harbour threshold to ₹2,000 crore from ₹300 crore alongside an automated approval system also provided much-needed fiscal predictability for large Global Capability Centres (GCCs).
The proposal of a tax holiday until 2047 for any foreign company establishing data centres in India, coupled with a specific safe harbour (a legal provision or regulation that reduces or eliminates liability, penalties or, tax, scrutiny for individuals and businesses, provided they meet specific, pre-defined conditions) of 15% on cost for companies providing data services from India to a related entity, creates a powerful anchor incentive,” said an expert.
Simultaneously, the 20-year tax holiday for Cloud service providers acknowledges data is the new sovereign currency.