The tax-free status for export-oriented firms set up in government-run Software Technology Parks of India (STPI) is due to end at the end of 2009-10, while the information technology industry copes with the effects of a recession in its prime market, the US. It hopes Finance Minister Pranab Mukherjee will be kind enough to extend it.
“The government needs to provide a stimulus to grow the economy and create new jobs,” said Kris Gopalakrishnan, chief executive officer, Infosys Technologies, and also called for investment in infrastructure and education.
The National Association of Software and Service Companies (Nasscom) says India needs tax clarity to combat protectionism and also match emerging rivals like China and the Philippines.
Vinnie Mehta, executive director of the Manufacturers’ Association of Information Technology (MAIT), said hardware firms should not be made to pay more than the current 8 per cent excise duty, while double taxation of software in some cases also needed to end.
“It is imperative that the government announces an extension of the fiscal benefits under Section 10A/10B (of STPI law) to mitigate impact of the recession and protectionist measures being adopted globally,” Som Mittal, president at software industry body Nasscom said.
Nasscom has also recommended that the Section 10AA of the Income Tax Act be reviewed with regard to export profits of Special Economic Zones (SEZ). “Currently, SEZ export profits are required to be computed with reference to the total turnover of the assessee, creating a discriminatory structure,” Nasscom says.