By IANS
New Delhi : India’s small and medium IT firms would be adversely affected if the government discontinues their tax benefits, a Planning Commission report said Wednesday.
Under the tax benefit scheme, called the Software Technology Parks of India (STPI), which was introduced in 1999, firms get tax holiday on profits from exports. The scheme is scheduled to end in March 2009.
“The introduction of the income tax benefit under the SEZ (special economic zone) Act has queered the pitch and if the concession is not extended for STPIs, a non-level playing field would be created after March 31, 2009, between STPI units, which will not get income tax benefits and units within the SEZs, which will get such benefits,” the report said.
“Additionally, the withdrawal of the STPI benefits will have more adverse effect on the SMEs (small and medium enterprises),” it said, adding that the SMEs do not have the capacity to build SEZs and will have to end up settling in large multi-products SEZs paying exorbitant rents.
“It is imperative for the government to address this issue at the earliest,” said the report.
Finance Minister P. Chidambaram did not address the issue in the budget for 2008-09.
The National Association of Software and Services Companies (Nasscom), the leading IT industry forum, has been also lobbying for the extension of the STPI scheme for a long time.