Tax sop rollback forces small cos to quit STPIs

Written by Sajan C Kumar | Chennai | Updated: Sep 26 2013, 16:48pm hrs
The withdrawal of income-tax benefits has taken a toll on small and medium IT firms, forcing many of them to exit from the Software Technology Parks of India (STPI) ambit. During the last two years, close to 1,000 small and medium IT units have gone out STPI mainly due to the fear of losing tax incentives, Omkar Rai, director-general, Software Technology Parks of India (STPI) said here on Tuesday.

The government had withdrawn the tax benefits under Section 10A / 10B from March 31, 2011. Speaking to a select group of journalists, he said that those who have exited were largely the small and medium-sized companies that have revenues between Rs 5 crore and Rs 10 crore.

During the last two years, around 1,000 IT firms have exited STPI units citing non-availability of tax sops. However, I hope that they will come back once they realise that there are a slew of other bigger benefits at STPI units such as single-window export clearance, he said.

Though exits have happened, a good number of additions also took place. Last year, around 200 units have joined the STPIs, he said. According to the report of the sub-group of the inter-ministerial standing committee released in April, the number of units registered under the STP scheme reached 8,455 in 2008-09, and have declined since then.