Why do data centers oppose the Indian reseller requirement for tax exemptions?

The mandatory routing through an Indian reseller creates friction and additional tax incidence on Indian revenue, which discourages investment decisions for foreign companies seeking tax holiday benefits.

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Data Centers Seek Tax Clarity to Boost India's Economy

Q: What tax changes are data center leaders requesting in India?

Data center leaders are requesting the removal of the requirement for foreign companies to route domestic revenue through an Indian reseller to avail of tax exemptions, and are pushing for zero customs duty on AI and cloud infrastructure.

Q: How could attracting global companies benefit India's economy?

Attracting global companies to establish operations in India could generate substantial personal income tax revenue, estimated between ₹40,000-60,000 crore annually from employees of these major firms.

5 Feb

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Summary

Data centers want zero customs duty on AI and cloud infrastructure.
Foreign firms urge direct service, not Indian resellers for tax exemption.
Attracting global companies could yield ₹40,000-60,000 crore annually.

Data Centers Seek Tax Clarity to Boost India's Economy

The Bharath Digital Infrastructure Association (BDIA) is advocating for significant changes to proposed tax policies affecting foreign companies operating in India's data center and cloud infrastructure sector. A key demand is the removal of a condition requiring foreign firms to route domestic revenue through an Indian reseller to qualify for tax exemptions.

BDIA argues that this reseller requirement introduces friction and additional tax burdens, ultimately hindering investment. They propose allowing direct service from foreign companies to Indian customers, with clear and competitive tax treatment, similar to the straightforward approaches offered by countries like Ireland and Singapore.

Furthermore, industry leaders are calling for zero customs duty on AI and cloud infrastructure. They project that attracting major global companies to establish operations in India could generate substantial personal income tax revenue, estimated at ₹40,000-60,000 crore annually from employees alone.