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GCC · 1 February 2026

Budget 2026-27 sets a single 15.5% IT safe harbour and fast-track APAs

Budget 2026-27 introduced a single 15.5% margin safe harbour for software, ITeS, KPO and contract R&D, raised the threshold to ₹2,000 crore and announced fast-track IT APAs.

Effective or announced 1 February 2026Impact for foreign investors: high

What changed

Budget 2026-27 replaced the earlier IT safe harbours with one 15.5% operating margin on cost for software development, ITeS, KPO and contract R&D. The eligibility threshold rose from ₹300 crore to ₹2,000 crore, approval is automated and the option can run for five years. Unilateral APAs for IT services are to be fast-tracked, aiming to conclude within two years.

Who it affects

GCCs and captive service centres charging a parent on a cost-plus basis.

What to do

Compare your current margin with 15.5%. Routine cost-plus centres may opt in; centres doing higher-value R&D or AI work should benchmark annually or consider an APA.

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