Nasscom urges Budget 2026 measures on startup taxes and clearer cloud rules
Ahead of Union Budget 2026, Nasscom has sought startup-friendly tax changes and clearer guidance on cloud computing regulation and taxation. The industry body highlighted ESOP taxation concerns and called for more certainty for foreign cloud providers using Indian data centres.
Industry pitch to ease friction for startups and tech firms
With Union Budget 2026 nearing, Nasscom has urged the government to take steps it says would make India’s tech ecosystem more predictable and startup-friendly. The industry association’s wishlist includes tax and regulatory measures aimed at supporting innovation-led companies while reducing compliance uncertainty for both domestic startups and global cloud providers operating in India.
A central element of Nasscom’s recommendations relates to Employee Stock Option Plans (ESOPs), which are widely used by startups to attract and retain talent. The association argued that deferring ESOP-related tax payments for more startups could reduce cash-flow strain on employees and make early-stage hiring packages more competitive, especially when high-growth firms compete with established employers.
Cloud policy clarity as a business necessity
Nasscom also flagged the need for clearer rules around cloud computing, especially the taxation and regulatory treatment of foreign cloud service providers that use Indian data centres. The concern, as framed by the industry body, is that uncertain interpretations can discourage investment decisions or complicate long-term pricing and contracting for enterprise customers.
The push comes as more Indian businesses move workloads to the cloud, and as sectors such as banking, retail, manufacturing and government services demand stronger data localisation, resilience and security standards. In this environment, companies are seeking rules that are clear enough to plan infrastructure investments but flexible enough to keep pace with evolving technology models.
What Budget-linked policy changes could signal
While the Budget is not the only route for regulatory reform, announcements made around it often signal intent and shape expectations. For startups, even incremental tax simplification can influence funding runway calculations and hiring. For cloud providers, policy certainty can shape whether capacity expansions and new region investments are accelerated or delayed.
- Key asks: broader ESOP tax deferment and clearer cloud taxation rules
- Stakeholders: startups, employees, enterprise customers, foreign cloud providers
- Policy goal: reduce uncertainty and encourage long-term investment