Union Budget 2026-27 Brings Clarity, Stability to India’s IT Sector with Key Reforms

By:- Chanakya Bellam, Director, AION-tech Solutions

“Union Budget 2026–27 addresses one of the most persistent structural challenges faced by India’s IT sector transfer pricing uncertainty with a set of practical, execution-focused reforms. The consolidation of software services, ITES, KPO and contract R&D under a single ‘Information Technology Services’ category brings long-overdue clarity to how modern, integrated tech businesses operate.The expansion of the safe harbour threshold from ₹300 crore to ₹2,000 crore, combined with a uniform margin and a five-year validity option, meaningfully reduces compliance friction and litigation risk for mid-to-large IT firms and global capability centres. Equally important is the move to an automated, rule-driven approval process, which limits discretion and provides predictability in cross-border transactions.Fast-tracked unilateral APAs and the extension of modified returns to associated entities further strengthen India’s attractiveness as a base for global technology operations. Overall, these reforms signal a mature, stability-driven policy approach that supports sustained growth, investment and long-term competitiveness in the IT ecosystem.”