Govt extends tax holiday to STPI by one year

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NEW DELHI, INDIA: Finance Minister P Chidambaram on Tuesday extended tax holiday scheme by a year for the STPI (Software Technology Park of India) scheme.

While replying to a debate on budget proposals in parliament, the FM said that the decision was made as the next budget is likely to be presented only after May 2009.

The tax exemption scheme for companies based in STPI parks was to expire in March 2009.

As per the minister's announcement, IT-BPO companies will be benefited from the tax exemption till March 31, 2010.

The IT industry has been clamoring for a tax exemption for the STPI scheme as a possible way to tide over the crises precipitated by factors like US recession, rupee appreciation and inflation.

The government had announced a 10-year tax holiday for the units in April 2000 under a policy aimed at encouraging growth in the IT sector.

The new of tax holiday extension has been greeted by the IT industry.

"We are pleased that the extensive follow up and work done by Nasscom with the PMO, Ministry of IT, Ministry of Finance and Ministry of Commerce, among others has provided this interim relief to the industry. In particular we are thankful to minister A Raja for his unstinted support," said Nasscom in a statement.

The decision is particularly beneficial for BPO companies and the small and medium segment, said Nasscom.

"This benefit will also give us time to come up with other workable and acceptable options for the future, beyond 2010. The IT-BPO industry is expanding into tier 2 and 3 cities which will help remove the pressure on large centers as well as help in more balanced economic development," the industry body said.

Nasscom added that it is important to provide incentives to those moving to tier 2 and 3 cities with STPI/SEZ like benefits.




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