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FM Nirmala Sitharaman announced that software development services, IT-enabled services, knowledge outsourcing services and contract R&D services will be clubbed under a single category of information technology services.
A common safe harbour margin of 15.5% will be applicable across all these services. She also proposed increasing the threshold for availing the safe harbour to INR 2,000 Cr from INR 300 Cr earlier.
The FM, in her Budget speech, said that applications under the safe harbour regime will be processed automatically, without any additional bureaucratic layer. Once an IT company opts for the safe harbour, it can continue under the regime for a period of five consecutive years.
Separately, for IT services companies seeking to conclude Advance Pricing Agreements (APAs), Sitharaman proposed a fast-track unilateral APA mechanism. Under this route, APAs will be concluded within two years, with a provision to extend the timeline by up to two months at the taxpayer’s request.
(The story will be updated soon)
The post Budget 2026: IT Services Clubbed Under Single Category, Safe Harbour Threshold Raised To INR 2,000 Cr appeared first on Inc42 Media.
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