Budget 2026 raises the Safe Harbour limit for IT companies from ₹300 crore to ₹2,000 crore, introduces automated approvals, a fixed profit margin, and fast-track APA—making taxes easier, faster, and dispute-free for mid and large IT firms.
Simpler Tax Rules for IT Companies
New Delhi: The government has made taxes easier for IT companies. All IT services—like software development, call centers, and research support—are now grouped under “Information Technology Services.” This reduces complexity and multiple tax rules.
IT companies can now opt for a fixed profit margin of 15.5%. Under this “Safe Harbour” rule, if a company sticks to this margin, the tax department won’t question its pricing, audits, or returns.
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Earlier, only companies earning up to ₹300 crore could use Safe Harbour. Now, companies earning up to ₹2,000 crore can benefit, helping mid and large IT firms avoid disputes and paperwork.
Safe Harbour approvals are now fully automated, with no human intervention. This speeds up approvals, reduces harassment, and makes the process transparent.
Union Budget 2026 has allocated ₹7.85 lakh crore to defence sector
Once an IT company opts in, it can continue using Safe Harbour for 5 years continuously, giving certainty and stability without yearly reapplications.
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For companies seeking more tax clarity, a fast-track APA is available. It ensures tax agreements within 2 years (extendable by 6 months) and allows past tax returns to be corrected, reducing disputes.
Budget 2026 makes taxes for IT companies simpler, faster, predictable, and dispute-free, especially benefiting mid and large IT firms.
