Continue I-T sops for software cos: Nasscom

Nasscom sought income tax incentives while demanding compulsory utilisation of the 3% of the govt spending on IT by various departments.

Pleading for fulfilling its earlier commitment for the long term benefits for the sector, software industry association Nasscom has sought continuation of income tax incentives while demanding compulsory utilisation of the three per cent of the government spending on IT by various departments.

HT Image

Tax incentives under sections 10A and 10B of the Income Tax Act should continue till 2010 as was earlier envisaged and exemptions be given in respect of exports profits in case of demerger and amalgamation, according to the Budget recommendations of the National Association of Software and Services Companies (NASSCOM).

The Association has recommended that demergers and amalgamations be specifically excluded from the provisions of sections 10A and 10B.

On Income tax related issues, it says government should amend the definition of royalty to provide that income derived from the sale of shrink-wrap software does not qualify as royalty and dividend from overseas subsidiaries should get income tax exemption.

Currently, if an overseas branch office brings in profits from its overseas software activities into India, then it gets income tax exemption whereas overseas subsidiary for similar operations does not get such exemptions.

The Association has also asked the government to pursue the Totalisation agreement with US and tax withholding issue with Japan to help Indian IT companies further their reach in these markets.