Apprehending serious trouble for the Indian software and service exports to Japan due to high tax rate there, the National Association of Software and Service Companies has requested the Centre to bilaterally renegotiate the Double Taxation Avoidance Treaty. Nasscom chief Kiran Karnik, met Commerce and Industry Minister Arun Jaitley on Wednesday on the issue.
The apex body said that the annual Indian software and service exports was expected to reach $50 billion by the year 2008 and of this Japan alone would account for three to four billion.
Writing a letter to the minister on behalf of the entire IT and software industry, Karnik said: "Indian Competent Authority should initiate mutual agreement procedure with Japanese Competent Authority under the provision of Article 25 (3) of the DTAT for resolving the issue of Japan's insistence on levying 20 per cent withholding tax on Japanese firms importing software and service from India."
He said as a result of the current tax structure, the Indian companies were facing adverse implications in terms of significantly higher effective tax rate, potential exposure to double taxation and impact on export of software and service.
