Tax certainty to boost India’s competitiveness
Union Budget 2026 arrives at a time when the global economy is navigating unusual headwinds, from geopolitical realignments and supply-chain constraints to a visible recalibration of capital towards resilience rather than pure scale. In such moments, clarity of domestic policy matters as much as ambition. The government’s decision to act on several long-standing industry priorities on taxation signals that India is choosing predictability and competitiveness as twin anchors for its next phase of growth.
For India’s technology sector, this is particularly consequential. This is further reinforced by India’s emergence as a global hub for Global Capability Centres, which have grown at a 7 percent CAGR between FY20 and FY25. In this context, a tax framework that reduces friction, accelerates resolution and provides certainty is not merely compliance reform, but an economic enabler.
The enhancement of Safe Harbour thresholds for IT services from INR 300 crore to INR 2,000 crore, the consolidation of software development services, IT-enabled services, KPO and contract R&D relating to software development into a single category with a uniform margin, the move towards automated and rule-driven approvals without officer examination, and the option for a continuous five-year application together represent a decisive shift from process-heavy compliance towards trust-based governance.
The fast-tracking of unilateral Advance Pricing Agreements for IT services, with an endeavour to conclude them within two years, further strengthens this certainty framework. Equally important is the reduction in pre-deposit requirements for appeals, which eases cash-flow pressure and restores balance in dispute resolution. Collectively, these measures signal a deliberate effort to turn international taxation into a competitive advantage for India.
For an industry that relies on global delivery confidence, these changes improve ease of doing business, encourage reinvestment and reinforce India’s standing as a dependable partner. Union Budget 2026 should also be viewed in the context of the reform momentum built since the last Budget.
Over the past year, progress on GST rationalisation and compliance simplification, the continued push on deregulation and Ease of Doing Business reforms, and the operationalisation of the new labour codes are collectively moving India towards a more predictable and investment-friendly environment.
Seen against this backdrop, the international tax certainty measures in this Budget are not isolated interventions, but part of a broader reform arc aimed at reducing friction, improving competitiveness and supporting long-term growth.
Rajesh Nambiar, President, Nasscom