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New treatment of software exports income mooted

BS Corporate Bureau & Agencies

The ministry of communications and information technology is proposing an alternative treatment of export income of software companies.

As per the proposal put forward by the ministry, software companies will be asked to invest a portion of their turnover in any infrastructure bonds instead of levying tax on their income.

Rajiv Ratna Shah, secretary, ministry of communications and information technology, said the information technology ministry had made a presentation with the finance ministry opposing the move to impose tax on software companies.

"An alternative has to be found wherein software companies can contribute to the nation building. We certainly do not want to return to the tax inspector regime", he said.

"This is in the best interests of boosting software exports from the country which had registered a remarkable 30 per cent growth last year despite recession," he added.

In the Union Budget 2002-03, the finance minister announced that 100 per cent deduction of export profits allowed to certain units under sections 10A and 10B of the Income-tax Act will now be reduced to a 90 per cent deduction for the assessment year 2003-2004.

However, software units located in Software Export Zone continued to enjoy exemption of their export income.

To a query, Shah said that IT export, which now stands at $8 billion during 2001-02, would reach $50 billion by 2008, representing an annualised 30 per cent growth.

He said the target of $50 billion worth of software exports from the country by 2008 could be easily met if the present growth rate of over 30 per cent was any indication.

He did not rule out the possibility of the growth rate picking up to the level of as much as 50 per cent in coming years, so that the target could be achieved much earlier.

Software exports from the country are present in the range of $8.2 billion to $8.4 billion per annum.

Shah said, as part of the IT ministry's initiatives in enhancing computer literacy and computer education in the country, two major pilot projects under the 'Gyanvahini' and 'Vidhyavahini' schemes would be launched this year.

Gyanvahini is aimed at e-enabling the Indian varsities, professional colleges, technical institutions in a phased manner.

Under the pilot project to be launched by July next, at least five universities beginning with the Delhi University would be provided with state-of-the-art internet connectivity.

Vidhyavahini is a scheme meant for at least 60,000 schools across the country. The idea is to provide computer software, hardware and Internet connectivity to these schools with the involvement of state education departments, charitable trusts and voluntary organisations.

The pilot project under the scheme would be launched by December next in eight select districts across the country, he said, adding that the process of identifying the districts was currently on.

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