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Informist, Sunday, Feb. 1, 2026

--BUDGET: 15.5% common safe harbour margin for all IT services

--BUDGET: Safeharbour for IT svcs by automatic process without officer

--BUDGET: To up threshold of IT svcs safe harbour norms to INR 20 bln

--BUDGET: To fast track advance tax ruling process for IT svcs cos to 2 years

MUMBAI – The government has proposed the clubbing of group software development services, information technology-enabled services, knowledge process outsourcing, and contract research and development related to software development under a single category of 'Information Technology Services', with a common safe harbour margin of 15.5%, according to the Union Budget for 2026-27 (Apr-Mar) presented by Finance Minister Nirmala Sitharaman in the Lok Sabha Sunday.

The Budget also proposed raising turnover threshold to avail the safe harbour scheme for IT services to INR 20 billion, from INR 300 million. This would help expand the number of eligible companies under the scheme. "Safe harbour for IT services shall be approved by an automated rule-driven process without any need for tax officer to examine and accept the application," Sitharaman said. "Once applied by an IT Services company, the same safe harbour can be continued for a period of 5 years at a stretch at its choice."

Further, in her Budget speech, Sitharaman said that for companies opting for certainty through advance pricing agreements, the government will fast-track unilateral APAs for IT services and try to conclude them within two years. "This timeline could be extended by six months at the taxpayer's request," she said. The facility to file modified returns, currently available to entities entering into an APA, will also be extended to their associated entities, as per FY27 Budget proposals.  End

Reported by Sunil Raghu

Edited by Tanima Banerjee

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