Moneycontrol
Jan 07, 2016 09:31 PM IST | Source: PTI

IT industry seeks relief from double tax,export boosting steps

Representatives of information technology hardware and software industry in a pre-budget meeting with Finance Minister Arun Jaitley also sought measures to facilitate exports and simplification and rationalisation of taxation.


Facing slowdown in major markets abroad, the Indian IT industry today sought relief from double taxation on software, as well as cushion from protectionist measures being taken by several countries.

Representatives of information technology hardware and software industry in a pre-budget meeting with Finance Minister Arun Jaitley also sought measures to facilitate exports and simplification and rationalisation of taxation.

They also demanded deferring implementation of the new guidelines to decide on the Place of Effective Management (POEM) by couple of years citing that short notice period can be a hurdle for industrial growth.


They also suggested that the scope of POEM need to be rationalised and made applicable to overseas shell companies, an official statement said. The draft POEM guidelines of CBDT had suggested two stage process for determining the place of effective management of a company, with a view to assess its tax liability.

In his remarks, Jaitley said Indian economy has emerged as one of the fastest growing economies in the world with a GDP growth of 7.3 percent in 2014-15 compared to 6.9 percent growth in 2013-14 and 5.1 percent in 2012-13.


The IT sector, the Minister said, was a key pillar in various flagship initiatives like digital India, Make in India, Skill India as well as Start-up India, among others.

"We have flagged our concerns with regard to double taxation on software products. While the GST will address that, we have suggested that some measures be taken to address the issue till the time GST comes into force," Nasscom President Rentala Chandrashekhar told reporters.


Government levies service tax on a software of foreign source downloaded from Internet while both VAT and service tax are levied on software purchased domestically. IT sector has asked the government to provide level playing field between the two. Representatives from leading IT companies including Tata Consultancy Services, Infosys, Wipro and HCL were also present in the meeting.

"The larger issue for Indian IT sector is to remain competitive in view of the protectionist measures being taken in some large markets," Chandrashekhar said. 

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