Bring STPI Schemes at Par with SEZs- Nasscom

News Posted - 2010-02-19

Nasscom, the representative body of IT-BPO firms in the country, on Wednesday said it has recommended that the STPI initiatives are brought at par with special economic zone (SEZ) schemes to help smaller firms remain competitive. “In our Budget 2010-11 wishlist submitted to the government, we have recommended that the STPI (Software Technology Park of India) initiatives should be at par with SEZ schemes as this will help the small and medium companies remain competitive,” Nasscom President Som Mittal said. Indian IT firms are looking for an extension of the tax holiday for the STPI scheme.

“We want the STPI extension to happen particularly for SMEs and Tier II and III cities as its more viable for them. It (STPI) should mirror the SEZs as this would provide a level-playing field for the entrepreneurs,” Mittal said. The sunset clause under section 10A and 10B of the Income Tax Act, which expires this year, gives a tax holiday to the companies operating under the STPI scheme and these benefits are available till 2011.

Currently, the IT companies pay a minimum alternative tax of 15 per cent. It was raised by four per cent in the last budget, which takes the effective tax rate to about 20 per cent. Without the STPI tax exemption, the industry will have to pay corporate tax of over 33 per cent. Mittal also said that the government needs to increase the outlay on education and e-governance projects.

Source: 19/2/10