The Hindu : No plan for service tax on software exports: Singh

Online edition of India's National Newspaper
Tuesday, Mar 04, 2003

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No plan for service tax on software exports: Singh

By Our Special Correspondent

NEW DELH MARCH 3. The Union Finance Minister, Jaswant Singh, today made it clear that the Government had no intention of imposing a service tax on the export of software and other information technology (IT)-enabled services.

Mr. Singh's response came to questions raised by industrialists at a post-budget meeting organised by the Confederation of Indian Industry (CII) here today. He also indicated that he could consider bringing the Wireless in Limited Loop (WLL)-based mobile phones under the one-by-six criteria for compulsory filing of income tax returns. On another issue, he said the demand for lowering the minimum capital requirement of Rs. 100 crores for entering the health insurance business could be "looked into".

Mr. Singh also held out the assurance that the Government would try to prevent a cascading effect of the proposed dividend distribution tax of 12.5 per cent on companies and mutual funds proposed in the latest budget.

On a possible lowering of the minimum capital base of Rs. 100 crores to enter the health insurance business, he said he could "re-examine" the entry norm but the problem was that the reduced limit could be misused. "These limits are fixed by the Insurance Regulatory and Development Authority (IRDA). I don't want to ride hard on that as it is a sensitive horse," he said.

Expressing concern over the revenue deficit, Mr. Singh said the new cash management scheme for major spending Ministries to be introduced from the coming fiscal year, the buyback of high-cost securities worth Rs. 40,000 crores from banks and the debt restructuring scheme for the States which could result in savings of up to Rs. 83,000 crores would have a positive impact on the overall revenue position.

Admitting that the high fiscal deficit was a matter of concern, he said: "what worries me is the revenue deficit". Although the Government had curtailed expenditure to the tune of Rs. 6,000 crores and introduced the cash management system in major spending Ministries, it could not continue to spend more than what it earned.

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