Continue STP scheme beyond 2009: Nasscom

Staff Reporter

Calls for a look at FBT on ESOP scheme

Mechanism for advance pricing sought

NEW DELHI: The National Association of Software and Service Companies (Nasscom) has urged the Finance Minister P. Chidambaram to continue the Software Technology Park (STP) scheme beyond 2009 and extend tax incentive to the information technology sector for the next ten years. It has also demanded broadening the eligibility criteria for the large taxpayer unit (LTU) scheme and refund of service tax paid on services utilised for export of computer software and business process outsourcing (BPO) services.

In its pre-Budget memorandum, the association said “BPO is a new and nascent industry with great growth and employment potential. At the same time, competition from other countries is intense. Therefore, there is a strong case to nurture and support this industry. Extension of STPI is one necessary step”.

Nasscom has also urged the Finance Minister to look into the critical issues of fringe benefit tax on employee stock option scheme and indirect taxes on import of services which it said was hurting the competitiveness of the industry.

Similar to the existing mechanism for issuing advance rulings to provide certainty on issues of tax interpretation and principles, Nasscom has urged the Government to set up a mechanism for advance pricing agreements on transfer pricing issues.

This will provide the much needed tax certainty and avoid protracted litigation against transfer pricing adjustments at the field level, it added.

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