India Budget Delivers on Tax Measures to Boost IT Sector

India’s proposals to ease tax rules for multinationals in its 2026 budget unveiled Sunday will provide them the certainty they need in cross-border transactions, according to practitioners.

In her budget speech, Finance Minister Nirmala Sitharaman proposed reforms to safe harbor rules in which Indian tax authorities accept the arm’s-length price for transfer pricing transactions declared by taxpayers in certain sectors.

She proposed a reduction in safe harbor margin rates for information technology services companies to 15.5%—down from rates that can be as high as 18%—and permission for larger companies to apply for the safe harbor.

The proposals mark “one ...