New Delhi, August 4: The leading industry body NASSCOM has welcomed the Taxation and Other Laws (Amendment) Bill, 2026, calling it a positive move for India’s data center industry. This bill aims to simplify the tax exemption framework under the Finance Act, 2026 for foreign companies utilizing services from designated data centers in India.
In a statement released on Tuesday, NASSCOM noted that while the bill is still under consideration in Parliament, the proposed changes will benefit the industry significantly. The new provisions will eliminate the need for foreign companies and data centers to obtain separate government notifications for different cases. Additionally, data center facilities operated on ownership or lease basis will also be recognized.
The industry organization stated that the revised framework will greatly benefit foreign cloud service providers, companies operating Global Capability Centers (GCCs), and other foreign entities working in India. Many companies operate complex business models involving various group entities, foreign resellers, Indian distributors, and cross-border customer services. Thus, removing the requirement for separate notifications will enhance tax clarity and reduce approval-related uncertainties for foreign firms.
NASSCOM has long advocated that the tax exemption framework should not transform into a complicated approval process linked to investment or other additional conditions. Instead, it should maintain a simple and transparent mechanism that provides tax certainty. The organization believes this change is a significant step in that direction.
The new provisions will also ease the burden on Indian data center companies. The elimination of the requirement for separate notifications will reduce unnecessary administrative overhead and make it easier for global customers to utilize data center infrastructure in India. According to NASSCOM, transitioning from an approval-based system to a condition-based framework will prove beneficial for industry growth.
This bill proposes amendments to the Income Tax Act, 2025, the Finance Act, 2026, and the Payment and Settlement Systems Act, 2007. It also aims to simplify tax regulations for eligible foreign investment funds and fund managers, thereby reducing compliance burdens while maintaining necessary security provisions.
Additionally, the bill proposes new tax exemptions for foreign investors investing in government securities. Experts believe this could help India attract global investments and strengthen its position in the data center and digital infrastructure sectors.
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