NEW DELHI: Union Minister of Finance & Corporate Affairs Nirmala Sitharaman while presenting the Union Budget 2026-2027 in Parliament, announced major reforms in the technology sector.

She announced that software development services, IT enabled services, knowledge process outsourcing services and contract R&D services relating to software development will be clubbed under a single category of Information Technology Services with a common safe harbour margin of 15.5 percent.

Sitharaman further informed that the threshold for availing safe harbour for IT services to be enhanced from 300 crore rupees to 2,000 crore rupees. Safe harbour for IT services shall be approved by an automated rule-driven process, can be continued for a period of 5 years at a stretch.

The Unilateral Advanced Pricing Agreement (APA) process for IT services to be fast-tracked with the endeavour to conclude it within a period of 2 years, which can be extended by 6 months on taxpayer’s request. The facility of modified returns available to the entity entering APA to be extended to its associated entities.

While welcoming the Union Budget 2026-27, Atul Soneja, Chief Operating Officer, Tech Mahindra, “The Union Budget 2026 reinforces India’s emergence as a trusted technology and innovation partner. The Government’s recognition of cutting‑edge technologies such as Artificial Intelligence as force multipliers for good governance is particularly encouraging. It underscores the pivotal role of the Indian IT industry in delivering innovation, efficiency and scalable digital solutions for the nation. Initiatives such as the IndiaAI Mission, National Quantum Mission, National Research Fund and the enhanced R&D ecosystem reflect a bold, inclusive, and future‑ready vision. This alignment of policy, technology and talent will accelerate India’s journey toward becoming a global innovation powerhouse. Additionally, the launch of India Semiconductor Mission 2.0 will significantly strengthen the country’s technology ecosystem by deepening the integration of hardware and software capabilities, positioning India as a leader in next‑generation digital infrastructure.”

Meanwhile, Anku Jain, Managing Director, MediaTek India, said “The expansion of India Semiconductor Mission through ISM 2.0 in Budget 2026 is a strong step towards building India as a global semiconductor hub. By prioritizing the development of full-stack Indian IP and domestic equipment manufacturing with continued policy support, the government is fostering an environment to boost innovation and design, strengthening India’s competitiveness by supporting scale, speed and just-in-time manufacturing.”

Commenting on the Union Budget 2026-27, Anurag Saxena, Managing Director, Star Infomatic said “The Union Budget 2026–27 has reinforced India’s push towards a technology-driven and self-reliant economy, with enhanced focus on digital infrastructure, capital investment, and advanced manufacturing.”

Saxena further added that the Budget’s emphasis on record capital expenditure and the rollout of India Semiconductor Mission 2.0 signal the government’s intent to build a robust and resilient technology ecosystem capable of supporting long-term growth.

He highlighted that policy measures around AI-led platforms such as Bharat Vistar, modern agricultural solutions, and continued support for MSMEs and manufacturing will unlock new opportunities for enterprises across sectors.

“At Star Infomatic, we view this Budget as an enabler to strengthen indigenous technology development, reinforce localized supply chains, and help businesses adopt enterprise-grade digital, automation, and infrastructure solutions,” Saxena said.

Lt. Gen. AK Bhatt (retd.), Director General, Indian Space Association (ISpA) said “We are hopeful that today’s Budget, with its emphasis on easing processes and creating a more investment friendly environment for science and technology, will encourage greater private sector participation. The increase in ISRO’s allocation to Rs 13,705.63 crore in FY 2026–27 is an important signal that will help support deeper private sector participation in ISRO led programmes across launch vehicles, satellites and scientific missions. Alongside this, the announcement on expanding telescope infrastructure and learning facilities is a meaningful step towards strengthening India’s scientific base in astrophysics and astronomy. Together, these measures can improve observational capabilities, enable long term research and strengthen collaboration between ISRO, academia and industry, gradually enhancing India’s contribution to global space science and the broader space ecosystem.”

Agendra Kumar, Managing Director, Esri India said, “The Union Budget’s strong emphasis on long-term growth, Atmanirbharta, and India’s emergence as a global manufacturing and logistics hub creates significant opportunities for the geospatial sector. The substantial increase in capital expenditure to Rs. 12.2 lakh crore, with a clear focus on freight and rail corridors, inland waterways and multimodal infrastructure, will play a critical role in reducing logistics costs and turnaround times. Investments aimed at improving Tier-2 and Tier-3 cities, alongside the AMRUT programme, will accelerate balanced urban development. The Rs. 1.4 lakh crore provision to the states will lead to initiatives that will underscore the growing role of geospatial intelligence in planning, monitoring and decision-making, positioning the sector as a key enabler of India’s development agenda.”

Ganesh Gopalan, Co-Founder & CEO, Gnani.ai, said “The Union Budget 2026 is a timely and forward-looking budget, with the Finance Minister rightly highlighting that AI will have a strong multiplier effect on the Indian economy. The focus on assessing the impact of emerging technologies like artificial intelligence on jobs and skills reinforces the need to prepare for this shift. The adoption of AI and rapid tech advancements is essential for inclusive national progress, driving productivity and new economic opportunities. Taxation benefits for data centres and safe harbour clauses will further enable large-scale AI model training and infrastructure growth. Initiatives like multilingual AI-based agriculture tools for farmers show meaningful grassroots impact, while large-scale upskilling and industry–academia collaboration remain key to building a future-ready workforce”

Abhishek Garg, Director, DBG Technology Pvt. Ltd. said “Union Budget 2026 further strengthens the foundation for the Government’s enhanced capital expenditure and progressive industry-focused schemes — particularly the expansion of the India Semiconductor Mission 2.0 with a significant outlay — signal a transformative push for electronics, semiconductors and high-value tech manufacturing. The emphasis on electronics components manufacturing, skills development and strategic investment incentives is a decisive step toward reducing import dependence and scaling indigenous capabilities. We are encouraged by this forward-looking policy framework that aligns with our commitment to innovation, ‘Make in India’, and empowering the Indian technology ecosystem. We believe the budget focuses on accelerating growth for the industry but will also help in strengthening India’s position in the global technology landscape, inspiring confidence for long-term investment, job creation, and sustained competitiveness.” 

Sunil Arora, National Head, Taxation, ASA & Associates said “From a transfer pricing standpoint, the Budget 2026–27 proposals represent a considered shift toward greater certainty. The consolidation of Software Development/ITES/KPO/R&D services into a single bucket of 'IT Services’, expansion of safe harbour thresholds from INR 300 cr ($33mn) to INR 2000 cr ($217mn), adoption of uniform margins of 15.5% and the introduction of automated approvals should narrow the scope of potential transfer pricing controversy for IT companies and Global Capability Centres (GCCs). Furthermore, the focus on expediting unilateral APAs and introducing safe harbours for data centres, bonded warehousing and toll manufacturing activities reflects a practical approach to evolving business models.”

Sunil Arora, National Head, Taxation, ASA & Associates said, "The taxation of buybacks as capital gains is a welcome step towards simplification of shareholder taxation, specifically beneficial for minority and non-promoter investors. The additional levy of on promoters at 30% (non-corporate) /22% (corporate) appears to be an anti-arbitrage measure that addresses the use of buybacks as a dividend substitute. This could materially alter promoter-level tax outcomes and requires revisiting exit strategies."

Ankit Agarwal, Vice-Chairman & Non-Executive Director, Invenia-STL Networks said, “The Union Budget 2026 firmly positions the services sector as a core growth engine of Viksit Bharat, reinforcing its role in driving economic growth, employment and exports. The Budget advances the Government’s long-term focus on attracting foreign investment into digital infrastructure, strengthening India’s emergence as a preferred cloud services hub while fostering domestic innovation. A clear emphasis on data centres recognises them as critical enablers of India’s digital growth and its ambitions in artificial intelligence, cloud computing and digital public infrastructure, supported by incentives aimed at strengthening the country’s data infrastructure and AI-led capabilities. Equally important is the shift towards tax clarity and certainty to reinforce India’s position as a global technology and data hub. Consolidating software, IT-enabled services, KPO and contract R&D under a single Information Technology Services framework will also bring in clarity and tax certainty. A uniform safe harbour margin, higher eligibility thresholds and automated approvals will significantly reduce compliance friction and strengthen India’s standing as a global IT services hub. Together, these measures will strengthen India's trajectory to becoming a trusted, scalable destination for digital workloads, aligning talent, technology and infrastructure for sustained growth in an AI-led global economy."

Sharad Malhotra, Managing Director, Nippon Paint (India) Group said, “Union Budget 2026 reinforces the government’s focus on sustaining economic momentum through higher capital expenditure, infrastructure creation and fiscal discipline. This continued emphasis on investment-led growth will be critical in supporting India’s long-term ambition of becoming the world’s third-largest economy while creating meaningful employment at scale. The proposal to support states in setting up three dedicated chemical parks through a cluster-based, plug-and-play framework is a timely step. It will strengthen domestic manufacturing capabilities, improve supply chain efficiency and reduce import dependence, which is particularly important for sectors such as paints and coatings that rely on a robust chemical ecosystem. Overall, the Budget reflects a balanced approach that combines industrial growth, technological advancement and sustainability. By improving ease of doing business amid a volatile global environment, it lays the foundation for higher productivity, long-term manufacturing resilience and India’s emergence as a globally competitive industrial hub.”

Avinash Kumar, COO, DJT Microfinance said, “Budget 2026-27 truly honors the spirit of 'Sabka Saath, Sabka Vikas' by focusing on inclusive development at the grassroots level as a key driver of growth for the rural economy. The emphasis on 'SHE Marts' to empower women entrepreneurs and the top-up of the Self-Reliant India Fund for micro-enterprises, with banks now covering 98% of villages, will aid financial inclusion, ensuring that the dividends of our 7% growth reach the last mile, turning every village into an engine of economic participation.”

Vasudha Madhavan, Founder & CEO, Ostara Advisors said “This Budget reflects a shift from aspiration to execution. The creation of rare earth corridors in mineral-rich states addresses a critical supply-chain vulnerability by anchoring domestic manufacturing capabilities. Importantly, the Rs. 20,000 crore commitment to carbon capture and storage establishes a credible foundation for decarbonising hard-to-abate sectors such as power, steel, and cement, where alternatives remain limited at scale. The government’s phased, programmatic approach to CCUS enables industrial emissions reduction without disrupting growth, strengthens energy security, and advances India’s net-zero pathway in a pragmatic, economically aligned manner.”

Monica Pirgal, CEO, Bhartiya Converge, said “By unifying IT services, easing safe harbour norms, and decisively rewarding scale, the government has removed the core friction points that global enterprises faced while expanding in India. The move to a single IT Services framework and predictable margins replaces years of classification ambiguity and tax uncertainty with clarity and confidence. Most notably, raising the safe harbour threshold to Rs. 2,000 crore signals a powerful shift scale is no longer penalised but actively encouraged. Combined with automated approvals, long-term incentives for cloud and data infrastructure, and a renewed focus on services-led employment and skills, India is no longer competing only on cost. It is positioning itself as the most predictable, scalable, and future-ready global operations hub for enterprises building long-term value”

Dr. Sanjay Gupta, Vice Chancellor, World University of Design said, “The Budget’s strong push towards the creative and design economy is a welcome step for India’s youth. I have been advocating for this. By expanding AVGC and content creation labs across schools and colleges, the government is opening doors to future-ready careers within the growing creative economy. The proposal to strengthen design education addresses a long-standing talent gap. Together, these measures will nurture creativity, generate meaningful employment, and position India as a global hub for design, content, and innovation”

Nilanjan Banik, Professor of Economics and Finance, School of Management, Mahindra University said, “From a macroeconomic standpoint, Budget 2026 signals continuity and discipline, which markets value. The transition to the Income Tax Act 2025 is a welcome move toward simplicity and transparency for the common taxpayer. By restructuring PFC and REC and forming a high-level committee for 'Viksit Bharat' banking, the government is ensuring our financial sector is robust enough to handle global volatility. The push for asset monetization through REITs and the 12.2 lakh crore capex will provide the necessary liquidity to keep the 'Reform Express' moving. It is a stable, non-populist budget that prioritizes long-term economic resilience over short-term gains.”

Dr. Yajulu Medury, Vice Chancellor, Mahindra University, said "The Union Budget 2026-27 takes a bold step toward making India a global knowledge hub. By focusing on 'Yuva Shakti' initiative, the government is bridging the gap between classroom learning and real-world careers, especially as the economy becomes more knowledge-driven. India will become a world leader in services sector with 10% share by 2047 due to introduction of high-powered Education-to-Employment Enterprises Standing Committee. The proposal for five new university townships and modular 'Corporate Mitra' courses will change how we train our youth for the global market.”

Dr. B. K. Chakravarthy, Dean, School of Design Innovation, Mahindra University said “The Budget’s emphasis on the ‘Anusandhan’ National Research Fund and AI Mission marks a turning point for Indian innovation, where design innovation bridges design thinking and technology to spark breakthroughs. Proposing a new National Institute of Design in East India and supporting high-tech toolrooms for precision manufacturing signals that ‘Made in India’ is evolving into ‘Designed in India’—fusing design with advanced tech for global competitiveness.  The focus on Animation, Visual Effects, and Gaming (AVGC) via Mumbai’s Creative Technology labs will supercharge our creative economy by blending artistic design with computational power. Through the Mahatma Gandhi Gram Swaraj Yojana, design innovation integrates cutting-edge technology with traditional craftsmanship, rooting progress in our communities and positioning India as a global leader in the design landscape.”

Prashant Solomon, Director, Chintels Group, CREDAI NCR EC/GC Member said “The Budget outlines an impressive roadmap for the real estate and infrastructure sectors, balancing fiscal discipline and long-term value creation with a bold, infrastructure-led vision. The proposed Infrastructure Risk Guarantee Fund will help address the financing bottlenecks, de-risk construction phases and provide an added impetus for the private sector. Combined with the Rs. 1 lakh crore Urban Challenge Fund, it signals a transformative shift toward making our cities resilient hubs of economic activity, inclusive urban development and sustainable growth. The focus on Tier 1 and Tier 2 cities will drive investment and growth, laying the foundational infrastructure for a Viksit Bharat.”

Ruby Sinha, President, BRICS CCI WE (Women Empowerment) and Founder, sheatwork said “It is encouraging to see the Hon’ble Finance Minister reaffirm that the 21st century will be driven by technology-led growth in the Union Budget 2026-27. Her emphasis on women in STEM and the inclusive adoption of technology reflects a forward-looking and equitable vision for India’s development. Building on the success of the Lakhpati Didi Programme, the proposal to support women in transitioning from credit-led livelihoods to becoming enterprise owners is particularly heartening. The setting up of community-owned Self-Help Entrepreneur (SHE) Marts is another welcome step that will strengthen grassroots entrepreneurship. Small and medium-sized enterprises are the backbone of the Indian economy, and the introduction of a dedicated Rs. 10,000 crore SME Growth Fund to create future champions, along with the Rs. 2,000 crore infusion into the Self-Reliant India Fund to sustain access to risk capital for micro enterprises, will go a long way in accelerating women-led entrepreneurship across the country.”

CP Gurnani, Co-Founder and Vice Chairman, AIONOS said, “Union Budget 2026 signals a decisive shift in how India is approaching technology, from adoption to strategic capability building. The emphasis on AI, semiconductors, cloud and data infrastructure reflects a clear understanding that leadership in the digital economy is built bottom-up, starting with strong foundations. The strengthening of the India AI Mission provides a coordinated framework to accelerate AI research, deployment and ethical governance across sectors. Importantly, this is not a narrow tech agenda. By aligning AI investments with skilling, workforce readiness and MSME enablement, the Budget recognises that scale, inclusion and competitiveness must move together.”