Telecom and IT Minister A Raja today met Prime Minister Manmohan Singh to pitch for the extension of tax sops enjoyed by the IT firms for another three years.
Union Minister for Communications and Information Technology, A Raja on Wednesday assured that the Indian IT sector that the ministry was doing its best to convince the government that the Software Technology Parks of India (STPI) scheme should be extended beyond 2009.
'What I hope to do is provide a vehicle for that scale and growth in literacy and English as a second language here.'
Small and medium information technology companies operating out of the Software Technology Park of India (STPI) and who have not relocated their business operations to the special economic zones (SEZs) could stand to lose a substantial part of their tax holidays after the forthcoming Budget.
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 government has given an 'in-principle' approval to the special incentive package prepared by the department of information technology for semiconductor manufacturing and other high-tech industries.
Special economic zones dedicated to the infotech sector may receive a body blow if the tax exemptions provided to Software Technology Parks of India under Section 10(A) and 10(B) of the Income Tax Act are extended beyond March 31, 2009. According to a senior central government official, not more than half of the nearly 100 notified infotech SEZs will survive if the tax sops are extended.
"If the tax holiday is withdrawn, STPIs will lose the level-playing field vis-a-vis special economic zones. We have recommended that the government either withdraw the tax holiday to SEZs or continue the incentive to IT companies," an official with knowledge of the deliberations told Business Standard. STPIs enjoy direct tax exemption under sections 10A and 10B of the Income-Tax Act, 1961. The benefits are scheduled to expire on March 31, 2009.
The software industry on Friday hit out at the government for increasing the minimum alternate tax and for ignoring the industry's plea for extending STPI scheme which would have continued to give tax breaks.
The move to extend the income tax benefits enjoyed by units covered by the Software Technology Parks of India Act and those set up in export oriented units by another year -- up to March 31, 2011 will benefit around 6,000 STPI units and 2,486 EoUs. In its budget-related wish list, the commerce ministry had recommended a three-year extension of the scheme, while the industry has been asking for five.
According to Nasscom, India must make its R&D significantly more robust to realise the 'Make in India' dream
Offshore projects accounted for over 70 per cent of the total software exports of Tamil Nadu during 2003-04, according to Software Technology Parks of India, Chennai.
The Centre expects its revenue loss on account of tax sops to export oriented units under Software Technology Parks of India (STPI) scheme to go up by over 21 per cent to Rs 11,501 crore (Rs 115.01 billion) this fiscal, over the previous financial year.
In a bid to provide reliable data connectivity to the software export companies in the East and North-Eastern India, the Software Technology Park of India will set up two more such parks in West Bengal and one in Manipur.
'Every educational institution should have incubating centres so that students will get exposed to entrepreneurship early.'
The data centre will act as a disaster recovery platform.
Even as Finance Minister P Chidambaram said that a final decision on expiry of tax benefits to export-oriented units and Software Technology Parks of India had not been taken yet, government sources indicated that an extension of the concessions was unlikely.
IT companies are dependant on headcount for their revenues and fringe benefits forms a part of the compensation payable to employees.
Overall, the budget was Neutral for IT sector. Services sector continues to grow in double digits. Services sector growth pegged at 9.3 per cent.
Percentage of liberalization is yet to be seen, but this for sure will open inroads for significant developments in the industry.
IT sector wants STPI benefits extended for one year in this Budget.
I-T dept has asked for Rs 5,357 crore ($865 million) alleging the company had suppressed its revenue for FY09 to evade taxes
The government is expected to end the benefits under Section 10A and 10B of the Income Tax Act.
The Union budget marks a watershed in the life of the Indian information technology services industry, akin to a family's coming of age rites of passage!
The 2011-12 Budget has failed to bring cheer to the Indian IT sector as Finance Minister Pranab Mukherjee did not make any major announcements to boost the segment.
Small and medium IT companies seek extension of benefits under STPI, increased spending on education, e-governance and more transparency.
Extending STPI tax benefits beyond 2010 (it was extended by a year in 2009) has been a long-standing demand of the software sector.
Different industry and trade bodies have extended their support to BangaloreIT.in, the premier annual IT event organised by the Karnataka government and STPI. The three-day event will be inaugurated on the 29th of October in the premises of Bangalore International Exhibition Centre (BIEC).
The central government is likely to extend the Software Technology Parks of India (STPI) scheme beyond 2009 only to Indian information technology-enabled services/business process outsourcing (ITeS/BPO) firms. A proposal to this effect has been included in the 11th Five-Year Plan document, which will be put up for the approval of the National Development Council, headed by the prime minister, on December 19.
The Sensex opened 35 points higher at 17,051. Nervousness in morning trades saw the index slip marginally into red to a low of 17,012. It finally ended with a gain of 362 points at 17,378. Financial stocks ended with smart gains after the RBI left repo and reverse repo rates unchanged. The central bank, however, hiked CRR by 25 bps. HDFC soared 6% to Rs 2,881. SBI rallied 3.3% to Rs 1,794, and HDFC Bank added 2% to Rs 1,548. Grasim plunged over 6% to Rs 2,472.
The IT/ITES exports from Andhra Pradesh have crossed Rs 18,582 crore ($ 4.5 billion) in the fiscal year 2006-07 as against Rs 12,521 crore in fiscal 2005-06.
Google Inc, the world's largest search engine, is all set to open a high-end research and development centre in Bangalore.\n\n\n\n
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