Finmin asked to extend STPI scheme

The Software Technology Parks of India (STPI) has appealed to the Finance Ministry to extend its STPI scheme, which promises a tax holiday to IT companies, beyond March 2009 by viewing the issue 'sympathetically.'

Speaking to reporters here after releasing the ISA-IDC Report on 'India Semiconductor and Embedded Service Industry (2007-2010)', E K Bharat Bhushan, Director-General, STPI said: "A majority of our members are small and medium enterprises (SMEs) and they cannot afford to pay high leasing costs in the special economic zones. In this backdrop, we request the finance ministry to help the SMEs by extending tax exemptions to them under the STPI scheme. We don't want the SMEs to suffer from disadvantages."

The country's software exports touched Rs 1,44,000 crore in 2006-07. Of that, 95 per cent was from STPI members, he pointed.

Bhushan said the uncertainty over extension of the STPI tax exemption scheme had caused a dip in the registration of IT companies.

"There has been a decline in the number of IT companies registering with us for the last couple of quarters. This drop applies to both Indian and foreign IT firms." He, however, refused to quantify the decline.

The STPI scheme, which provides for tax exemption to export oriented IT companies under Section 10 A, is supposed to end in March 2009. "The commerce ministry had recently extended income tax exemption to EOUs located in industrial parks under Section 10B. We have requested the finance ministry to give similar exemption to the IT sector too," Bhushan said.