MAT levy on SEZs setback for IT industry: E&Y
While the overall Budget seems to be pragmatic and well balanced but, it seems to be a mixed bag for the IT Industry. Increased focus on e-governance and consequent opportunities will be welcomed by the Indian IT/ ITES industry.
February 28, 2011 / 18:16 IST
By Ravi Vishwanath, Tax Partner, Ernst & Young
While the overall Budget seems to be pragmatic and well balanced but, it seems to be a mixed bag for the IT Industry. Increased focus on e-governance and consequent opportunities will be welcomed by the Indian IT/ ITES industry. Reduction in the current surcharge rate for domestic companies (from 7.5% to 5%), coupled with an intention to phase it out altogether, is also a step in the right direction. Industry IT players with global footprint/ subsidiaries could also seek to benefit from the concessional 15% tax rate, on dividend remittances from their foreign subsidiaries. On the flip side though, the absence of any extension of the tax holiday under the Software Technology Park Scheme (particularly for the small and mid-tier IT players), proves to be a dampener. Also, the levy of Minimum Alternate Taxes on Special Economic Zone (SEZ) Developers, as well as existing SEZ Units (at an increased rate of 18.5% of book profits, such SEZ units being hitherto tax exempt), is a setback for the industry which has been keenly looking at expansion opportunities in SEZs.
On the indirect tax front, the Budget does not seem to have addressed some of the key concerns of the IT industry in entirety. While simplified procedures for service tax refunds by SEZ units, and a new scheme for exporter of
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
