The National Association of Software and service companies demanded on Wednesday that the tax incentives under section 10 (A) and 10 (B) of the Income Tax Act should continue till 2010, as committed by the government earlier.

The software association, as part of its pre-Budget recommendations, said that the government should honour the commitment of full exemption from taxes on exports profits till the specified period.

It also sought deletion or amendment to the sub sections of 10 A (9) and 10 B (9) to specifically exclude demergers and amalgamations, while all taxable services provided in relation to software and information technology should be exempted from the levy of service tax.

"There is also a need to make amendments in section 10 (A) and 10 (B) of the Income Tax Act, which is holding back acquisitions and mergers," a Nasscom statement said in New Delhi.

The association has also sought the removal of regulatory and procedural hurdles with regard to custom bundling, which is hurting the transaction for the software services sector.

"Exemption of physical bonding of premises, equipment by customs under various export promotion schemes should be allowed," it said.