Facing a slowdown in major markets abroad, the Indian IT industry on Thursday sought relief from double taxation on software, as well as a cushion from protectionist measures being taken by several countries.
Representatives of information technology hardware and software industry in a pre-budget meeting with finance minister Arun Jaitley also sought measures to facilitate exports and simplification and rationalisation of taxation. They also demanded deferring implementation of the new guidelines to decide on the Place of Effective Management (POEM) by couple of years citing that short notice period can be a hurdle for industrial growth.
They also suggested that the scope of POEM need to be rationalised and made applicable to overseas shell companies, an official statement said. The draft POEM guidelines of CBDT had suggested two stage process for determining the place of effective management of a company, with a view to assess its tax liability.
In his remarks, Arun Jaitley said the Indian economy has emerged as one of the fastest growing economies in the world with a GDP growth of 7.3% in 2014-15 compared to 6.9% growth in 2013-14 and 5.1% in 2012-13.
Nasscom Budget recommendations
Nasscom has sought a more conducive domestic investment environment with the avoidance of retrospective amendments and ambiguous provisions, as part of its Budget recommendations to the finance ministry.
In a statement on Thursday, Nasscom spoke of a certainty in the tax regime with a clear roadmap for rationalisation of corporate tax rate to 25%, abolishing MAT or rationalising the rate to one-third the corporate tax rate.
Nasscom president R Chandrashekhar said, “The government should commit towards offering a friction-less business environment and support to the IT-BPM industry, which is on the threshold of $100 billion exports this year. Being the sector that has put India on the global economic map, the government should leverage the expertise and talent from this industry to meet national development goals and to set milestones for the Indian economy.”
With respect to taxation on software products, Nasscom emphasised long-pending issue of dual levies. While the goods and services tax (GST) will hopefully address the dual levy issue, there is the need for intervention even under the current regime, it said and hoped for a interim resolution till the new legislation is approved.