New Delhi, Feb 28: The ``most IT-friendly'' Finance Minister, has happily,retained his reputation-more by default than by design. Budget 2001-02 hasgiven a boost to the software industry by including onsite services insoftware exports for tax exemption and allowing change of ownership inpublic listed software companies located in EPZ, EOU and STP withoutdepriving them of tax benefit.Reacting to the budget proposals, Mr Atul Nishar, chairman of Aptech says:``The income-tax exemption was subject to at least 51 per cent of theshareholding pattern remaining constant. Now that this has been eliminatedfor listed companies, it is a positive thing, particularly since it used tocome in the way of mergers and acquisitions.''
In the budget proposals the income from onsite services by the softwareindustry, has been granted the benefit of tax exemption like other exportearnings for all software development companies. Currently, onsite servicescontribute around 60 per cent of the total software exports from India.
On the down side, the Finance Minister has taxed the domestic sales ofsoftware companies located in EOU, EPZ and STPs. These units currently enjoytax exemption on 25 per cent of their domestic sales.
On the whole, Mr Dewang Mehta, president, NASSCOM termed the budgetrecommendations as a major boost to the software sector in India. Clearly,with no taxes slapped on software services or e-commerce-the industry'sworst fears-the industry is happy that Budget 2001 has such a limited focuson IT. "All of our demands have been met," insists Mr Mehta.
Copyright © 2001 Indian Express Newspapers (Bombay) Ltd.
