Tax holiday plan for foreign cloud firms

Centre promises zero tax to companies overseas that provide global cloud services by using data centres from India till 2047

- Shouvik Das

The Centre on Sunday laid out a proposal for global cloud service providers such as Microsoft, Google and Amazon to use more of Indian data centres, promising zero tax on global cloud services provided by them through an Indian entity and from an Indian data centre, Union finance minister Nirmala Sitharaman said at her Budget speech in Parliament.

“Attracting global business and investment, recognising the need to enable critical infra~ structure and boost investment in data centres, I propose to provide tax holiday until 2047 to any foreign company that provides cloud services to customers globally, by using data centre services from India,” Sitharaman said.

The finance minister's ninth consecutive budget, however, did not make any sweeping announcement or outlay on artificial intelligence (AI), like last year’s announcements on the India AI Mission. On Thursday, the FY26 Economic Survey flagged that India will take a slower, measured approach to investing in AI — instead of focusing on “scale.”

The Centre's FY26 budget receipts said that the government spent 2800 crore in this fiscal under the India AI Mission. For FY27, the finance ministry set aside 21,000 crore for investments under the Mission, which was notified in March 2024 with anet outlay of 210,372 crore.

Put simply, cloud providers will need to utilise Indian data centres, and offer their cloud platforms through Indian data centres to win the tax benefits.