The industry has widely welcomed this move as a forward-looking measure that enhances tax certainty and supports long-term cloud and data centre investments.

As the framework moves toward implementation, practical clarity will be critical to ensuring that the policy intent translates smoothly into operational reality. In this context, Nasscom has submitted a representation to the Chairman, Central Board of Direct Taxes (CBDT), requesting issuance of an explanatory circular or administrative guidance to address certain implementation aspects.

Ensuring Alignment with Modern Cloud Operating Models

Global cloud service provider (CSP) structures typically involve multiple entities within a group performing distinct functions-such as procurement of data centre capacity by one entity and customer contracting by another. Clarification has been sought to ensure that such standard commercial arrangements do not unintentionally affect eligibility for the exemption, provided statutory conditions are satisfied.

Similarly, guidance has been requested on the scope of the reseller routing condition. The intent of the provision is to address India-linked customer sales; however, practical interpretation in complex group structures may benefit from clarification to avoid unintended consequences.

Clarifying Key Definitions

Certain expressions used in the framework, such as "users located in India," may create interpretational uncertainty in enterprise contracting scenarios. In modern cloud delivery, services are often contracted centrally while accessed by employees across multiple jurisdictions. Industry has recommended that this condition be interpreted by reference to the contractual customer rather than the transient physical location of individual end users.

Further clarity has also been sought on the distinction between ownership or physical operation of a data centre and routine logical or software-level interactions that are intrinsic to cloud service delivery. This distinction is important to ensure that normal operational activities do not give rise to avoidable disputes.

Supporting Investment and Administrative Efficiency

The representation also addresses proportionate treatment of isolated non-routed India-linked transactions, eligibility of existing data centres once notified under the approved scheme, and administrative reliance on MeitY notifications to avoid duplication of examination by tax authorities.

Additionally, clarity on documentation and reporting requirements would help ensure that compliance obligations remain proportionate and aligned with the framework's objectives.

Moving from Announcement to Implementation

The issues raised are limited to implementation mechanics and are aimed at ensuring that the exemption operates in a clear, consistent, and commercially workable manner. Early clarification through a circular, FAQ, or administrative guidance would enhance certainty, reduce avoidable litigation, and reinforce India's commitment to fostering a stable and predictable tax environment for digital infrastructure investment.

As India's digital economy continues to scale, aligning policy design with operational realities will remain key to sustaining investor confidence and supporting the growth of global cloud and data centre ecosystems in the country.

Datacentre CBDT