Union Budget 2026: More GCCs can dock here with FM's safe harbour boost

With a slew of new transfer pricing measures, the finance minister has sent a clear signal to multinational corporations that India is keen to attract global capability centres (GCCs).

GCCs are offshore captive units set up by MNCs to handle IT, R&D and strategic business operations, rather than functioning merely as back-office support. Since they provide services to their parent entities, GCCs do not earn profits in the conventional sense.




Transfer pricing refers to profit margins used by tax authorities to determine the tax payable on such intra-company transactions. In India, margins applied across IT, BPO and R&D activities-ranging from 17% to 24%-have long been a source of dispute for GCCs.

The finance minister has proposed an expansion of the safe harbour framework, raising the threshold from Rs 300 crore to Rs 2,000 crore and lowering the margin to a uniform 15.5%. She also announced that approvals under the regime will be automated and rules-based. The changes are expected to bring more GCCs under the safe harbour framework, offering a single, predictable rate. Software development services, IT-enabled services, knowledge process outsourcing and contract R&D have been brought under a single "IT services" category.

Companies beyond the Rs 2,000-crore threshold have to enter into an advance pricing agreement. Here too, FM has promised to fast-track the agreement, targeting closure within two years.