Nasscom Seeks 40% Cap For Fiis

The National Association of Software and Services Companies (Nasscom) has called upon the Union government in its pre-budget recommendation to increase the upper limit in investments by the foreign institutional investors (FIIs) in infotech companies from the current level of 30 per cent to at least 40 per cent.

According to Dewang Mehta, president, Nasscom, currently, FIIs are allowed to invest up to 24 per cent of total paid-up shares of a company in India. However, the companies are authorized to increase this limit to 30 per cent for their own respective companies after taking approval from respective boards, he said.

 

Nasscom has also demanded to continue with the incentives, simplified procedures and implement further economic reforms for overseas acquisitions. It has also requested the finance minister to implement the recommendation of the national IT task force and to retain the zero import duty regime on computer software.

Nasscom has also called upon the government to implement the recommendations by the Sebi committee on venture capital, headed by K B Chandrashekhar.

In another demand it has asked the government to revise the guidelines for taxability on employees stock option scheme (Esop) so that the beneficiary of the scheme are only taxed at the time of sale of stock option and not at the time of exercise. "The Esop should also make it mandatory that employee can only exercise it after at least one year of date of offer. This will further justify the applicability of long term capital gains," pointed out the industry association.

"This has already been accepted by the national IT task force and ministry of information technology and the current Esop tax guidelines are causing lot of hardship to employee," said Mehta. "Nasscom has worked closely with Sebi in formulation of Esop guidelines so that not only wealth could be distributed amongst the employees, but also to curtail brain drain. However, current taxation guidelines of Esop are not at all favourable," he added.

Nasscom has also demanded increase in limit of Indian employee taking Esop in overseas companies from the current limit of $ 10, 000 to at least $ 100, 000 for the period of five years.

Nasscom has also demanded continuation of benefits under section 80HHE of Income Tax Act, which allows income tax exemption to profits from software exports.

"Any withdrawal of benefits could adversely affect the growth of software exports, " Mehta said.