Special Correspondent

NEW DELHI: The Union Finance Minister P. Chidambaram on Tuesday extended income tax exemption for export-oriented Software Technology Parks of India (STPI) by one year till March 31, 2010, a move that was overwhelmingly welcomed by the information technology industry.

Nasscom hails decision

The National Association of Software and Service Companies (Nasscom) welcomed Mr. Chidambaram’s announcement granting one year extension (till 2010) of tax holiday for software companies under the Software Technology Parks of India (STPI) scheme.

“We are pleased that the extensive follow-up and work done by Nasscom with the Prime Minister’s Office, the Ministry of Information Technology, Ministry of Finance and Ministry of Commerce, among others, has provided this interim relief to the industry. In particular, we are thankful to the IT Minister, A. Raja, for his support.” Nasscom said in a statement.

“This decision is particularly beneficial for business process outsourcing (BPO) companies and the small and medium segment that have been greatly impacted by the rupee appreciation, inflation and signs of slowdown of the U.S. economy,” it said. Nasscom further said that the benefit would also give it time to come up with other workable and acceptable options for the future, beyond 2010.

“The IT-BPO industry is expanding into Tier-II and Tier-III cities which will help remove the pressure on large centres as well as help in more balanced economic development. It is important that we spread this move to Tier-II and Tier-III cities with STPI and SEZ like benefits,” it added.