Indian IT industry wants tax concessions to continue

9 years ago | 28-02-2008 | SAMPURN

BANGALORE, February 28: A day ahead of the Finance Minister P Chidambaram presenting India's Budget for the 2008-09 fiscal, the country's information technology industry has asked for liberal measures of government compassion to help it overcome the multiple uncertainties confronted by it.

Among other things, thethat earns substantial foreign exchange for the country desires that the Manmohan Singh government grant it a freedom from paying income tax for an extended 10-year period on the exports by software developers and outsourcing firms. It also wants the government to relieve the service and fringe-benefit taxes.

In fact Nasscom as well the others in the industry are of the opinion that the tax holiday has been a key factor in the growth of the Indian IT and BPO industry. As a result of this benefit the revenues of the BPO industry seems to be growing by more than 33 percent to $ 64 billion in the fiscal ending March 31. According to Nasscom president Som Mittal, many of the small information technology firms who are not in a position to make investments plans owing to the uncertainty of the tax repercussions and feeling insecure in a competitive market.

Espousing the cause of the IT industry, Mittal said that buoyant by the success of Indian IT business form, countries like China have started offering tax benefits and other concessions to their information technology companies. Mittal emphasized that it was essential to widen the tax holiday so that Indian companies remain competitive in the global market. He was of the opinion that prolonging the tax exemption a year before it ends will restore confidence of the companies that they could go along with investment and hiring plans.

Incidentally, the country's information technology sector, which has 1.6 million employees, has spearheaded the economic charge to annual growth of 9 percent and was professed to have become flexible enough not to need tax breaks beyond the next year. But a scramble for extending the tax concessions under the purported Software Technology Parks of India (STPI) plan has grown louder as the industry passes through difficult times.