'Export oriented firms should pay tax'

Infosys chief suggests the amount can be used for Govt schemes like mid-day meal, reports Gaurav Choudhury.

Barely a month before the presentation of Union Budget, Infosys Chief Mentor NR Narayanamurthy said on Friday that export oriented companies, including software firms that enjoy tax exemptions, should be ready to pay taxes. The amount collected could be put in a special fund for rolling out a country-wide mid-day meal scheme.

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The question of taxing profits earned from exports has been a much debated one for years. Under the existing provision of the Income Tax Act, software export-oriented companies enjoy a deduction on export profits till 2009-2010.

"With the budget to be presented shortly, I would suggest that export oriented firms earning more than Rs 50 crore should be willing to pay corporate taxes, provided the revenue thus generated is parked in a dedicated fund for implementing an efficient mid-day meal scheme.

At present earning levels, this would generate revenue to the extent of Rs 16,000 crore and with the government contributing a similar amount, it make available Rs 32,000 crore for implementing the scheme", Narayanamurthy said at the Partnership Summit organised by the Confederation of Indian Industry (CII) in Bangalore.

The IT industry however is far from enthused. "It's a noble thought. But we can at best take it as an individual view. It cannot be representative of the industry. Every company has its own sets of priorities and the business plans have been worked out, factoring in the tax sops till 2010," says an industry source who did not want to be named.

Several corporate houses, including Infosys, are engaged in executing mid-day meal schemes in association with various state governments. Narayanamurthy said that it was important to ensure that "children of the families from the bottom of the pyramid of society receive adequate nutrition", and the scheme was implemented in a transparent manner.

"Otherwise, the demographic dividend that everybody is talking about could well turn into a demographic deficit", he said.

The strong demand for Indian software over the past few years has placed India amongst the fastest-growing IT markets in the Asia-Pacific region. The software and information technology enabled services (ITES) exports from India reached a level of $23.4 billion (Rs 1.05 lakh crore) during the year 2005-06 and is expected to clock a growth rate of more than 30 per cent in the current financial year.

Narayanamurthy said that the cost of providing the mid-day meal scheme, including breakfast and lunch, would, on an average, work out to Rs 10 per child and the government should put nutrition of children and population control as the two topmost policy priorities.

Email Gaurav Choudhury: gaurav.choudhury@hindustantimes.com