Among the other demands in its pre-Budget Memorandum 2008, the IT industry body has also suggested broadening the eligibility criteria for the large tax payer unit scheme, foreign tax credits, advance pricing agreements to provide upfront tax certainty, and refund of service tax paid on services utilised for export of computer software and BPO services.
The scheme has proven to be a big success and a major contributor to the growth of the Indian economy. Smaller companies are finding it difficult to rent SEZ space as enough capacity is not always available in the right location.
Also, the rentals are very high with developers skimming the cream. SMEs cannot be expected to move from their present base to other locations where there are SEZs.
Also, BPO companies are now moving to smaller cities where there are no SEZs. The BPO sector too is a new and nascent industry with great growth and employment potential.
At the same time, competition from other countries is intense, since it does not need any specialised manpower. Therefore, there is a strong case to nurture and support this industry. Extending STPI is one necessary step, states the memorandum.
Nasscom has also asked the finance ministry to broaden the eligibility criteria for the Large Tax Payer Unit (LTU) Scheme, calling it very restrictive. The current definition provides that only those companies that have paid Rs 10 crore (Rs 100 million) or more in advance tax are eligible.
Hence, Nasscom has suggested that since tax deducted at source (TDS) on salaries is a statutory obligation cost on companies to ensure efficient tax collections, the eligibility criteria may be expanded to include those companies that make annual remittances of Rs 50 crore (Rs 500 million) or more as TDS.
Further, the industry body has suggested the inclusion of payments of self assessment tax, tax paid on assessment, TDS and fringe benefit tax also in the current definition as all these payments are made under the Income Tax Act.
The current definition of the service tax criteria provides that only those companies which have paid Rs 5 crore (Rs 50 million) or more in service tax are eligible to join the scheme.
