IT sector seeks relief from double tax, retrospective orders

Govt levies service tax on a software of foreign source downloaded from internet while both VAT & service tax are levied on software purchased domestically

Indian IT sector has sought relief from double taxation on software products, and provide cushion to the industry in view of protectionist measures being taken in the global market.

"We have flagged our concerns with regard to double taxation on software products. While the GST will address that, we have suggested that some measures be taken to address the issue till the time GST comes into force," Nasscom President Rentala Chandrashekhar told reporters after a pre-budget meeting with Finance Minister Arun Jaitley here today.

Government levies service tax on a software of foreign source downloaded from internet while both VAT and service tax are levied on software purchased domestically. IT sector has asked the government to provide level playing field between the two.

Representatives from leading IT companies including Tata Consultancy Services, Infosys, Wipro and HCL were also present in the meeting.

"The larger issue for Indian IT sector is to remain competitive in view of the protectionist measures being taken in some large markets," Chandrashekhar said.

The US, which is the major source of business for Indian IT sector, hiked visa fee last month. The original H-1B visa application fee is just USD 325. Almost all Indian IT companies would have to pay between USD 8,000 and USD 10,000 per H-1B visa from April 1 when the next filing session starts, due to various levies imposed on them.

The IT players also urged the Finance Minister to provide them staggered payment option to employees which companies are required to make under a notification issued by Labour Ministry on bonus payment, effective since April 1, 2014.

"We have requested the government that retrospective orders should be avoided. Now Labour Ministry rule on bonus has become a law. We have asked...To give us option of staggered payment," Chandrashekhar said.

IT companies have also requested for one-time relief for measures being taken in the aftermath of Chennai floods, with regard to benefits being given to employees like relief rehabilitation measures.