BENGALURU: At a time when technology companies globally are cutting jobs, and Indian IT firms are slowing campus hiring, the Union Budget 2026–27 has placed fresh focus on artificial intelligence (AI), skills, and the future of work.
In her Budget speech, Finance Minister Nirmala Sitharaman said emerging technologies, including AI, are changing how work is carried out across sectors.
To study this shift, the government announced a new Education to Employment and Enterprise Standing Committee, a high-powered body focused mainly on the services sector, including IT services, professional services, healthcare, tourism and digital services.
One of the committee’s main responsibilities will be to assess the impact of AI on jobs and skill requirements. It will study how the nature of work is evolving and identify new skills that workers. The committee will suggest how AI can be integrated into education, starting from the school level. It will also recommend ways in which AI-based systems can be used to match workers with jobs and training opportunities.
However, the Budget does not specify any funding allocation or timeline for implementing the panel’s recommendations.
Alongside its focus on jobs and skills, the Budget introduces significant tax-related changes for the IT services sector. Several technology-related activities, including software development services, IT-enabled services, knowledge process outsourcing and contract research and development, will now be grouped under IT services. Under this structure, all such services will follow a common safe harbour margin of 15.5%.
Industry executives welcomed the measures, particularly the emphasis on artificial intelligence and tax certainty.
Aparna Iyer, CFO, Wipro, said, “The Budget articulates the government’s vision to promote the Indian IT services sector as a primary driver of India’s economic growth, leveraging Artificial Intelligence as the force multiplier.” She added proposals such as combining IT services and R&D services into a single bucket and increasing the safe harbour threshold would “provide tax certainty and reduce the cost of compliance for companies operating in the sector.”
The Budget also raised the revenue limit for companies eligible for safe harbour rules from `300 crore to `2,000 crore. Approvals under the safe harbour system will now be automated and rule-based, without examination by tax officers. Once a company opts for safe harbour, it can continue under the same rules for five years. For companies choosing Advance Pricing Agreements (APA). Unilateral APAs for IT services are expected to be completed within two years, with a possible extension of six months.
Atul Soneja, Chief Operating Officer, Tech Mahindra, said that the government’s recognition of AI as a force multiplier for good governance was “particularly encouraging.”
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