National Association of Software and Service Companies has recently announced its pre-Budget memorandum for 2026–27. The focus is on areas where friction tends to arise repeatedly, even though the broad policy direction is reasonably well understood. The intent is to highlight where adjustments in clarity, process or administration could materially improve outcomes without altering the underlying policy framework.
One of the key areas is international taxation and transfer pricing. Over the last two Union Budgets, there has been a visible effort to move towards greater certainty for routine cross-border transactions. Signals around expanding safe harbour and providing multi-year certainty recognise that standardised transactions benefit from simpler and more predictable approaches, particularly in sectors such as IT–ITES and global capability centres.
Recent administrative changes, including revisions to eligibility thresholds, suggest that this intent is beginning to be operationalised. At the same time, industry experience indicates that the effectiveness of safe harbour ultimately depends on its usability. Rates, thresholds and scope need to reflect current operating realities, and the framework needs to be supported by adequate transfer pricing capacity. When this balance is achieved, disputes reduce at source and attention can shift to genuinely complex cases. This remains important work in progress.
Similar issues arise as India’s role in cloud infrastructure, data centres and digital delivery expands. Concepts such as permanent establishment, attribution and significant economic presence are well established, but their application to contemporary technology models continues to raise questions. Clear guidance and consistent application are often more effective in reducing uncertainty than additional provisions.
NASSCOM noted that beyond assessments, procedural aspects of tax administration continue to feature prominently in industry feedback. Delays in rectification, long appeal timelines and difficulties in securing timely refunds affect cash flows and add to uncertainty, particularly at a time when margins are under pressure. Suggestions in the memorandum relating to coordination between processing centres and field formations, adherence to statutory timelines and the ability to address genuine claims earlier in the process are intended to strengthen how the system functions in practice.