India's Global Capability Centre (GCC) ecosystem stands at a critical juncture as the country prepares for Budget 2026. With nearly 2,000 GCCs employing around two million professionals, India has established itself as the world's largest GCC hub. The sector has undergone significant transformation over the past decade, evolving from basic business process outsourcing operations focused on cost arbitrage to sophisticated strategic hubs handling knowledge services, digital engineering, analytics, research and development, shared services, and global decision-making functions.

Sector Evolution and Current Scale

The maturity of India's GCC landscape is increasingly evident through the growing prominence of Indian senior leaders who are securing global and regional leadership roles within multinational corporations. Recent years have witnessed accelerated growth in new GCC launches and expansion of existing centres, alongside exponential growth in allied ecosystems such as data centres.

Challenges and Competitive Pressures

Despite positive developments, GCC leaders face mounting challenges that could impact India's competitive position. Geopolitical tensions and rising anti-outsourcing sentiment have increased scrutiny of cross-border service delivery models. Restrictive visa regimes have complicated talent deployment strategies, while recent tariff-related developments have added uncertainty, prompting India to recalibrate its trade approach.

International competition has intensified significantly, with countries implementing aggressive strategies to attract GCC investments. The Philippines extended its Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, offering income-tax holidays and enhanced deductions for foreign investors establishing IT-BPM and R&D centres in special economic zones. Malaysia launched its Digital Investment Office (DIO), streamlining approvals and providing targeted incentives for digital infrastructure, including data centres and AI laboratories.

Industry Expectations for Budget 2026

The GCC sector anticipates several critical policy reforms in Budget 2026 to maintain India's competitive advantage and support continued growth.

Tax Policy and Regulatory Reforms

Industry leaders expect clear and stable tax policies coupled with robust dispute-resolution mechanisms. Key anticipated proposals include:

Specific Policy Priorities

The rationalisation of permanent establishment norms tops the industry agenda due to its interplay with transfer pricing and attribution risk of global profits to Indian activities. With visa restrictions affecting employee mobility, many headquarters personnel remain in India, creating potential service permanent establishment risks for parent companies.

The sector seeks relief for employees stranded in India who face additional tax burdens from dual taxation in both India and their home employment countries. Industry also expects policy changes to facilitate Indian leaders taking on global and regional roles without exposing GCC headquarters to additional transfer pricing mark-ups.

Expansion of safe harbour provisions for transfer pricing represents another priority, with expectations for sector-specific regimes featuring higher transaction thresholds and industry-based margins, particularly for capital-intensive areas such as data centres and digital engineering.

Tier-3 Cities Development Strategy

Budget 2026 could catalyse GCC expansion into tier-3 cities through targeted infrastructure development and policy frameworks. Proposed measures include industry-academia partnerships for advanced technical and multilingual training, incentives for regional hiring, and a national digital apprenticeship scheme emphasising innovation and practical skills development.

These lower-cost cities could emerge as competitive alternatives to emerging global GCC destinations while addressing congestion issues in tier-1 metropolitan areas. The strategy aims to create inclusive growth opportunities and expand India's GCC footprint beyond traditional urban centres.

Industry leaders across finance, fintech, and digital assets sectors are presenting their expectations for Budget 2026, focusing on tax reforms, improved compliance mechanisms, and measures to support innovation-led sectors. The recommendations span from streamlining existing tax collection systems to providing clearer regulatory frameworks for emerging asset classes.

TDS and TCS Streamlining Takes Priority

Experts have reached broad consensus on the need to rationalise Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) provisions to reduce compliance friction while enhancing transparency. Sarvjeet Virk, Co-founder and MD of Finvasia, emphasised that rationalising these thresholds could boost ease of doing business and investor confidence.

Karthik Narayan, Vice President (Tax & Transition) at Stellar Innovations, highlighted that regular updates to TDS and TCS rules would prevent taxpayers from being pushed into higher tax brackets due to nominal income growth, while promoting compliance and savings. The proposed measures focus on simplified reporting and aligning rates with realistic income and transaction levels.

Cryptocurrency Sector Seeks Regulatory Clarity

The virtual digital assets sector is advocating for clearer regulations and a calibrated approach to taxation. Multiple industry leaders have presented specific proposals to improve the current framework:

Nischal Shetty, Founder of WazirX, highlighted the need for clear compliance standards and reporting obligations to strengthen investor confidence. Edul Patel noted that Indian crypto investors have matured from hype-driven trading to a disciplined, long-term approach, suggesting that reduced TDS could lower friction and encourage responsible participation.

Raj Karkara stressed that consistent regulatory clarity would help build investor trust and enable businesses to operate responsibly, creating a balanced and predictable investment environment.

Middle-Class Tax Relief Proposals

Experts anticipate Budget 2026 will address equity in personal taxation through targeted relief measures. The key proposal involves introducing a new tax structure to provide proportionate relief:

Nehal Mota, Co-founder and CEO of Finnovate, recommended raising standard deductions for salaried employees to ₹1.00 lakh and enhancing long-term capital gains exemptions to support middle-class taxpayers.

Additional proposals include:

• Allowing housing loan interest deductions under the new tax regime
• Increasing relief on interest income for senior citizens
• Enhanced health insurance benefits for senior citizens
• Improved long-term capital gains exemptions

Industry Expectations for Compliance and Growth

The collective recommendations aim to create a fairer and more growth-friendly taxation environment. Industry leaders emphasise that these reforms would discourage offshore migration, improve domestic compliance, and support responsible investment practices across traditional and emerging asset classes.

The proposed changes reflect the industry's focus on balancing revenue generation with ease of doing business, particularly as India continues to develop its regulatory framework for digital assets while maintaining support for traditional investment channels.