Union Budget 2026-27 - Finance Bill, 2026

F. ATTRACTING GLOBAL BUSINESS AND INVESTMENT

The existing provisions of section 11 read with Schedule IV of the Act specifies the eligible income, which shall not be included in the total income of the eligible non-residents, foreign companies and other such persons.

2. In order to attract investment in data centre and promote artificial intelligence data centre framework in India, it is proposed to amend the Schedule IV to provide exemption to a foreign company, on any income accruing or arising in India or deemed to accrue or arise in India by way of procuring data centre services from a specified data centre, for a period upto tax year ending on 31st March, 2047.

3. One of the conditions for exemption is that where services are provided to India users by the foreign company, it shall be routed through an Indian reseller entity.

4. For the purposes of above provisions, it is also proposed to define the following terms, namely: __

(a) “data centre” means a dedicated secure space within a building or centralised location where computing and networking equipment is concentrated for the purpose of collecting, storing, processing, distributing or allowing access to large amounts of data;

(b) “data centre services” means services provided by a data centre through the use of physical infrastructure including land, buildings, mechanical electrical power equipment’s, cooling system, security and information technology infrastructure including servers, computers, storage systems, operating systems, security solutions, network and associated software platforms, networking and other equipment, human resource in India;

(c) “specified data centre” means a data centre which––

(i) is set up under an approved scheme and is notified in this behalf by the Central Government in the Ministry of Electronics and Information Technology; and

(ii) is owned and operated by an Indian company.

5. These amendments will take effect from the 1st day of April, 2026 and shall accordingly, apply in relation to the tax year 2026-27 and subsequent tax years.

[Clause 109]

 

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Full Text:

Union Budget 2026-27 - Finance Bill, 2026

Exemption for foreign companies on income from procuring data centre services if routed through an Indian reseller. A foreign company is exempt from Indian tax on income arising from procuring data centre services from a specified data centre, provided services to India users are routed through an Indian reseller; a specified data centre must be set up under an approved scheme notified by the Ministry of Electronics and Information Technology and be owned and operated by an Indian company; the exemption applies from the tax year beginning 1 April 2026 through the tax year ending 31 March 2047.