Got assurance on resolution of tax notice issue: Nasscom

IT industry association Nasscom today said it has got an assurance from the government that the service tax notices served to several IT companies has been "corrected" and the issue has been resolved.

However, it could not be confirmed from the tax department whether the government is withdrawing or amending the reported Rs 10,000 crore demand notices served to some 200 companies.

"The kind of tax notices which had been issued recently to a few companies that actually do not recognise IT services as exports because of some interpretation... we were happy to note that the Government has clarified in today's meeting that that situation has been corrected," Nasscom President R Chandrashekhar said.

Chandrashekhar was speaking to reporters after a meeting between IT industry and the Finance Minister Arun Jaitley today on pre-budget consultations.

During the meeting, the apex software body also discussed issues related to Place of Effective Management (POEM) and refund of service tax, amongst others.

On the tax notice issue, Chandrashekhar pointed out that the government has clarified that suitable advisories have been issued and that the "problem has been resolved".

"We have been informed that the clarification has already been issued and the matter stands resolved. We are waiting to get clarification," he added.

While Chandrashekhar did not divulge further details about the tax notices, reports suggest that many IT and IT enabled services companies had been sent notices by the tax department.

These companies were reportedly asked to return export benefits claimed in the last five years on software provided to clients outside India, and also asked to cough up service tax along with penalty.

Telecom Equipments Manufacturers Association Chairman Emeritus NK Goyal thanked the government for resolving the tax issue that had confronted the IT companies.

"We appreciate the Government for withdrawing tax notices ...that was served to IT companies," said Goyal who was also part of the meeting.