Tax Amendment Bill 2026 a positive step for data centre ecosystem: Nasscom
Synopsis
India's proposed tax amendment bill could be a turning point for the country's data centre sector. By scrapping case-specific approval requirements and shifting to a condition-based regime, the Bill addresses a core friction point for global cloud providers and GCC operators — and Nasscom says it is exactly the kind of certainty the industry has been pushing for.
Key Takeaways
The Taxation and Other Laws (Amendment) Bill, 2026 proposes to simplify tax exemptions for foreign companies using Indian data centres.
Nasscom called the Bill 'a positive step for the industry' on 4 August .
The Bill removes the need for case-specific notifications for both foreign companies and data centre operators.
Facilities operated through ownership or leasing are both recognised under the revised framework.
The shift from an approval-based to a condition-based regime is expected to benefit foreign cloud providers, GCCs, and Indian data centre companies.
The Bill also proposes simplified compliance for offshore investment funds and fresh tax exemptions for foreign investors in government securities.
Nasscom on Tuesday, 4 August welcomed the Taxation and Other Laws (Amendment) Bill, 2026, calling it a positive step for India's data centre industry. The Bill proposes to simplify the tax exemption framework introduced under the Finance Act, 2026 for foreign companies procuring services from specified data centres in India, removing the need for case-specific notifications and broadening the definition of eligible facilities.
Key Provisions of the Bill
The proposed legislation seeks to amend the Income-tax Act, 2025, the Finance Act, 2026, and the Payment and Settlement Systems Act, 2007. Critically, it eliminates the requirement for individual notifications for both foreign companies and data centre operators, while also recognising facilities operated through either ownership or leasing arrangements.
The Bill additionally proposes to simplify the tax framework governing eligible offshore investment funds and eligible fund managers by reducing compliance requirements while retaining core safeguards. Fresh tax exemptions for foreign investors in government securities are also on the table.
What Nasscom Said
'While the Bill is currently before Parliament, the proposed changes is a positive step for the industry,' Nasscom said in a statement. The industry body added that the shift from an approval-based process to a condition-based regime would reduce avoidable burden on data centre facilities and make Indian-operated infrastructure easier for global customers to use.
Nasscom noted it has been strongly advocating that the framework remain grounded as a tax certainty enabler, and must not become an approval-heavy scheme or a route to impose wider investment, capacity, or sourcing conditions unrelated to the tax question.
Impact on Foreign Cloud Providers and GCC Operations
The revised proposal is expected to benefit foreign cloud service providers and other foreign companies with workloads in India, including groups running Global Capability Centres (GCCs). Their operating models often involve group entities, overseas resellers, Indian reseller arrangements, and cross-border customer servicing.
According to Nasscom, removing the foreign company notification requirement reduces the risk that tax certainty becomes dependent on the specific entity named in an approval. 'The better test is whether the statutory conditions are met,' the body noted. This is a meaningful structural shift for multinational technology firms evaluating India as a data hosting destination.
Why This Matters for India's Data Centre Sector
India's data centre capacity has been expanding rapidly, driven by rising cloud adoption, GCC growth, and digital public infrastructure. Regulatory clarity on tax treatment has been a persistent concern for global operators weighing investments in Indian facilities. This Bill, if passed, would address one of the sector's longstanding friction points — the unpredictability of an approval-dependent tax regime.
Notably, the move also aligns with the Centre's broader push to position India as a preferred destination for global technology infrastructure. The Bill is currently before Parliament, and industry bodies are expected to track its passage closely.
Point of View
Not just administrative: moving from approval-based to condition-based tax treatment means global operators no longer have to bet on the discretion of a notification process. That matters enormously for long-cycle infrastructure investment decisions. India has been trying to attract hyperscaler and GCC investment for years, and regulatory unpredictability on tax has been a quiet but real deterrent. What the Bill does not yet address is whether the 'statutory conditions' threshold will itself become a new friction point — the devil will be in the subordinate legislation. Nasscom's caution that the framework must not become a route to impose 'wider investment, capacity, or sourcing conditions' signals that the industry is watching closely for overreach in implementation.
NationPress
4 Aug 2026
Frequently Asked Questions
What is the Taxation and Other Laws (Amendment) Bill, 2026?
It is a legislative proposal currently before Parliament that seeks to simplify the tax exemption framework under the Finance Act, 2026 for foreign companies procuring services from specified data centres in India. The Bill amends the Income-tax Act, 2025, the Finance Act, 2026, and the Payment and Settlement Systems Act, 2007.
Why has Nasscom welcomed this Bill?
Nasscom says the Bill is a positive step because it removes case-specific notification requirements for foreign companies and data centre operators, shifting to a condition-based regime. This reduces approval burden and improves tax certainty for global cloud providers and GCC operators using Indian infrastructure.
Who benefits from the proposed changes?
Foreign cloud service providers, multinational companies with workloads in India, Global Capability Centres (GCCs), and Indian data centre companies all stand to benefit. The removal of notification requirements makes Indian-operated infrastructure easier for global customers to use.
What other proposals does the Bill include?
Beyond data centres, the Bill proposes to simplify compliance for eligible offshore investment funds and eligible fund managers, while retaining core safeguards. It also introduces fresh tax exemptions for foreign investors in Indian government securities.
What concerns has Nasscom flagged about implementation?
Nasscom has cautioned that the framework must remain a tax certainty enabler and must not become an approval-heavy scheme or a vehicle to impose wider investment, capacity, or sourcing conditions unrelated to the tax question. The industry body is advocating for a clean, condition-based approach.
