IT Tax Benefits May be Extended for a Year

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Jul. 2 – The government may extend tax exemptions to March 31, 2010 for the exports earnings of information technology units doing business in the Software Technology Parks of India (STPI) in a bid to help the country’s sliding export market.

According to the Times of India, IT businesses working in the STPI have been qualified for tax exemptions for the first 10 years of operation with the offer expiring after March 31, 2009.

A senior commerce ministry official told the TOI that the ministry is recommending that the exemption be extended to 2011-12. However, the ministries of finance and commerce are divided over the issue. The commerce ministry wants the tax break on exports from STPI to continue and don’t want software companies in SEZs to avail of this benefit and on the other hand, the finance ministry wants to discontinue the STPI facility and allow the same in the SEZs.

Officials are worried that companies might not be able to competitively cope if the concessions are taken out.  The IT industry wants the STPI tax benefits to be extended for five more years. The industry is one of the country’s top earners while also providing more employment opportunities.