On February 1, 2026, the Union Minister of Finance and Corporate Affairs, Smt Nirmala Sitharaman, presented the Union Budget 2026-2027 in the Parliament. The threshold for availing safe harbor for IT services has been enhanced from Rs 300 crore to Rs 2000 crore. Safe harbor for IT services shall be approved by an automated rule-driven process. All software development services, IT enabled services, knowledge process outsourcing services and contract R&D services related to software development are proposed to be clubbed under a single category Information Technology Services with a common safe harbor margin of 15.5% applicable to all. Once applied by an IT Services company, the same safe harbour can be continued for a period of 5 years. For IT services companies who want to conclude Advance Pricing Agreement (APA), the Finance Minister announced fast track Unilateral APA process for IT services and endeavor to conclude it within a period of 2 years, with a possible extension of 6 months on taxpayer's request. The facility of modified returns available to the entity entering APA to its associated entities is also extended. Contact: Pankaj Srivastav. The release ID is 2221428.
Key Entities Referenced
Safe Harbour for IT Services: Mechanism allowing certain IT services to operate within predefined parameters, avoiding detailed scrutiny, with threshold enhanced from ₹300 crore to ₹2000 crore.
Union Budget 2026-2027: The annual financial statement presented to the Parliament, where the enhanced safe harbor threshold for IT services was announced.
Ministry of Finance: The Indian government ministry responsible for economic policy, which released the information regarding the enhanced safe harbour threshold.
Advance Pricing Agreement (APA): An agreement determining transfer pricing methods for cross-border transactions; a fast-track Unilateral APA process is mentioned for IT services.
Ministry of Finance
THE THRESHOLD FOR AVAILING SAFE
HARBOUR FOR IT SERVICES ENHANCED FROM
RS 300 CRORE TO Rs 2000 CRORE
SAFE HARBOUR FOR IT SERVICES SHALL BE APPROVED
BY AN AUTOMATED RULE-DRIVEN PROCESS
प्रव तथ: 01 FEB 2026 12:57PM by PIB Delhi
The Union Minister of Finance and Corporate Affairs, Smt Nirmala Sitharaman presented the Union
Budget 2026-2027 in the Parliament today.
Presenting the Budget, the Finance Minister said that India is a global leader in software development
services, IT enabled services, knowledge process outsourcing services and contract R&D services
relating to software development. These business segments are quite inter-connected with each other. All
these services are proposed to be clubbed under a single category Information Technology Services with
a common safe harbour margin of 15.5 percent applicable to all. The threshold for availing safe harbour
for IT services has been enhanced substantially from 300 crore rupees to 2,000 crore rupees in the Union
Budget 2026-27.The Finance Minister further said that 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. 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.
For IT services companies who want to conclude Advance Pricing Agreement (APA), the Finance
Minister announced fast track Unilateral APA process for IT services and endeavour to conclude it within
a period of 2 years. The period of 2 years can be extended by a further period of 6 months on taxpayer’s
request. The facility of modified returns available to the entity entering APA to its associated entities is
also extended.
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NB/ Pankaj Srivastav
(रलीज़ आईडी: 2221428) आगंतुक पटल : 596
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