Representative image of a tax holiday.
Credit: iStock Photo
Bengaluru: In the Union Budget 2025-26 the central government should announce tax holidays or concessions aimed at expanding global capability centres (GCC) in tier-2 and 3 cities, PwC said on Thursday.
Sandeep Puri, Partner, Price Waterhouse & Co, said the GCC needs further impetus from the government to grow in the smaller cities.
“May be a tax holiday if you are expanding in Tier 2, 3, 4 cities. Because Bengaluru, Hyderabad have witnessed phenomenal growth,” said Puri calling for special incentives for the firms setting up GCC facilities in the smaller cities like Indore, Jodhpur and Jaipur.
Currently, there are around 1,600 GCCs in the country that employ around 17 lakh people. The domestic GCC market size is estimated to reach $110 billion by 2030 led by software exports, which remains a key component of India’s service exports, as per a recent EY report.
In its recommendations for the Union Budget, which is scheduled to be presented on February 1, the global consulting firm EY has called for reduction in safe harbour margins.
It suggested that safe harbour margins for IT and IT-enabled services companies should be reduced to 14-15% from the current 17-18%.
At present only companies with a revenue of up to Rs 200 crore are eligible for safe harbours.
“These revenue thresholds should be removed so that even the larger companies can avail the benefit. These changes would be most useful for the IT and ITeS sector and the Global Capability Centers (GCCs) who are playing a significant role in the Indian economy today,” EY said.