Why in the News?
In Union Budget 2026–27, Finance Minister Nirmala Sitharaman announced a 20 year tax holiday till 2047 for foreign companies that provide global cloud services using data centres located in India, to boost India’s position as a global data and digital services hub.
What is the Announcement?
- Foreign companies offering cloud and digital services globally
- Using data centres physically located in India
- Will not be taxed on global income arising from such services
- Tax holiday applicable till the year 2047
Key Benefits
- Provides long term tax clarity and stability
- Encourages hyperscalers to locate data storage and processing in India
- Boosts employment, energy infrastructure and allied services
- Strengthens India’s role in cloud computing, AI and digital trade
Investments in Focus
- Google plans 15 billion dollar investment in AI data centres in Andhra Pradesh
- Microsoft and Amazon have invested billions in Indian data centres
- Indian conglomerates like Reliance Industries and Adani Group are also major players
Government View
- IT Minister Ashwini Vaishnaw stated that data centres will become a major strength for India in providing digital services to the world
| [2018] With reference to India’s decision to levy an equalization tax of 6% on online advertisement services offered by non-resident entities, which of the following statements is/are correct? 1. It is introduced as a part of the Income Tax Act
2. Non-resident entities that offer advertisement services in India can claim a tax credit in their home country under the “Double Taxation Avoidance Agreements” Select the correct answer using the code given below: (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 |
