In a post-Budget memorandum to government, Nasscom has reiterated its demand for allowing infotech companies to make overseas acquisition up to 30 per cent of their market capitalisation, or $1 billion, up from the present $100 million which it says is far from adequate.

Referring to the committee purportedly set up to look into the demand, Mehta quipped: "What is a committee going to do in it? We are saying where is the need for a case-by-case approval. Why not let the IT companies make the acquisitions without prior approval up to a reasonable limit as these decisions require a lot of speed and in most cases are done through stock swap."

Out of 10 demands made by Nasscom, four were fully met in the Budget, two partially met and four were not met. Mehta said the industry had decided to press for three crucial demands pertaining to taxing the employee stock options at the time of sale, raising the acquisition limit and continuation of export incentives to the new IT units coming up in software technology parks, export oriented units and export processing zones after March 31, 2000.

As per the Budget, new units registered in EOUs, STP and EPZ units after April 1, 2000, will not be eligible for the 10-year tax holiday. Nasscom has therefore asked for a gradual phase out of Section 10A and 10B of the I-T Act for tax holiday for STPs, EoUs and EPZs over next 10 years.

``The general feeling among not only the industry, but also among the investors, is why tinker when everything is going fine. Indian software industry is just beginning to come off age and reach out internationally. Raising the tax barriers for new players will harm the high growth trend among IT companies,'' he added.

As per the World Trade Organisation, tax incentives need to be removed only from 2003 and not 2000, Nasscom has pointed out. It has therefore suggested that Section 80 HHE of the Income Tax Act be diluted in a phased manner only from 2003 for a period of five years.

On misuse of ESOP, Nasscom has suggested a condition that such stocks can't be gifted before the first sale, or the employee would have to pay the relevant income tax at the time of gifting in case it happens before its first sale.