The Hindu : Software sector wants continuation of tax incentives

Online edition of India's National Newspaper
Wednesday, Feb 26, 2003

Business

Business

Software sector wants continuation of tax incentives

NEW DELHI FEB. 25. Pleading for fulfilling its earlier commitment for the long term benefits for the sector, the software industry association, National Association of Software and Service Companies (Nasscom) has sought continuation of income-tax incentives while demanding compulsory utilisation of the 3 per cent of the government spending on IT by various departments.

Tax incentives under Sections 10A and 10B of the Income-tax Act should continue till 2010 as was earlier envisaged and exemptions be given in respect of export profits in the case of demerger and amalgamation, according to the budget recommendations of the Nasscom.

The association has recommended that demergers and amalgamations be specifically excluded from the provisions of Sec.10A and 10B.

On income-tax related issues, it says the Government should amend the definition of royalty to provide that income derived from the sale of shrink-wrap software does not qualify as royalty and dividend from overseas subsidiaries should get income tax exemption. At present, if an overseas branch office brings in profits from its overseas software activities into India, then it gets income tax exemption whereas overseas subsidiary for similar operations does not get such exemptions.

The association has also asked the Government to pursue the Totalisation agreement with the U.S. and tax withholding issue with Japan to help Indian IT companies further their reach in these markets.

PTI

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