ICT Ministry favours uniform tax incentive

HYDERABAD: The Union Ministry of Information Technology & Communication (IT&C), on Wednesday, said it favours a uniform tax incentive scheme as opposed to differential incentives and tax breaks offered in SEZs and STPI units.

Recently, industry body Nasscom urged the Government to continue giving tax benefits to upcoming SEZs for few more years, which the Finance Ministry has proposed to revoke under the Direct Taxes Code (DTC) regime.

“There shouldn’t be any locational restrictions, because the moment it’s confined to either an SEZ or if there are stipulations of a minimum area or investment, it adversely affects the growth in SMEs and tier-II & III cities,” said R Chandrashekhar, Secretary, IT, Government of India.

The IT&C Ministry in consultation with the Ministry of Finance and PMO is working to harmonise and remove locational and other restrictions hampering the industry’s growth. He added that these issues will be deliberated over the next two months.

As per the revised DTC draft, which will replace the Income Tax Act of 1961 after approval by Parliament, tax exemption will be provided only for existing SEZ units and not new units. The DTC is likely to come into effect from April 1, 2011.

Meanwhile, the Planning Commission has given in-principle approval for setting up IT Investment Regions (ITIR), in Andhra Pradesh, Karnataka and Orissa. “We are seeking suggestions from other departments and respective state governments and over the next 3-4 months, we should be able to finalise the proposal,” Chandrashekhar said.

Stating that cyber security is an area of concern, he said that numerous initiatives are being taken and that the certain changes have been made in the Cyber Security Laws.

On the impact of the US policy restricting Indian companies to take up jobs, he said, “There aren’t any restrictions, but certain changes in the procedures and limits. But as long as the developed economies cannot meet requirements from their internal resources, there certainly will be an opportunity and a mechanism for the Indian industry to work together with them,” he said.