Tax Holiday, Safe Harbour for Data Centres, Safe Harbour Limit Up for IT Services
Overall investment in the sector, estimated at $60 billion between 2019 and 2024, is set to hit $100 billion by 2027, according to consultancy Deloitte
Chennai: Promoting investments in data centres, the Budget has proposed a tax holiday up to 2047 for foreign companies. While safe harbour is offered to data centre providers, the threshold of safe harbour for IT services has been enhanced from Rs 300 crore to Rs 2000 crore.
“Recognising the need to enable critical infrastructure and boost investment in data centres, I propose to provide 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,” the Finance Minister said.
“The proposed tax holiday for foreign cloud service providers will significantly accelerate data centre growth by attracting global hyperscalers and deepen long term investment in the segment, positioning India as a preferred hub for digital infrastructure and cloud-based service economy,” said Badal Yagnik, CEO & Managing Director at Colliers India.
The Budget also proposed 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. Safe harbour rules aim at simplifying compliance and reduce litigation by allowing eligible taxpayers to adopt predefined margins or prices for specified international transactions.
Overall investment in the sector, estimated at $60 billion between 2019 and 2024, is set to hit $100 billion by 2027, according to consultancy Deloitte.
The threshold for availing safe harbour for IT services is being enhanced substantially from Rs 300 crore to Rs 2,000 crore and will be approved by an automated rule-driven process without any need for a tax officer to examine and accept the application. It will continue for 5 years at a stretch.