IT industry lobbies for extended tax holiday Date:   Monday , December 31, 2007 The Indian IT firms’ tax holiday on profit from export under Software Technology Parks of India (STPI) scheme, which was introduced in 1999, is about to end by March 2009.Foreseeing this, the IT industry body National Association of Software and Service Companies (Nasscom) has put in a strong demand for the extension of tax holidays under the STPI scheme as part of its list of requests to the finance ministry. According to Nasscom, if the ministry denies approving their demands the only solution left for the industry is to move to the special economic zone (SEZ) to enjoy the benefit of tax concessions. However, Nasscom says this option has limitations and will affect the state of small and medium enterprises (SME) due to high rentals and low availability of SEZs in required locations. Moreover, currently the business process outsourcing (BPO) industry is gradually shifting to second and third-rung cities where there are no SEZs. “BPO is a new and nascent industry with great growth and employment potential. At the same time, competition from other countries is intense since it does not need any specialized manpower. Therefore, there is a strong case to nurture and support this industry. Extension of STPI is one necessary step in this direction,” Nasscom said in a statement. It has to be borne in mind that many other countries are offering big inducements to attract MNCs. Hence, Nasscom said that STPI scheme’s extension is necessary for creating a level playing field between small and big companies and between India and other countries. Other demands include broadening the network of the large tax-payer unit (LTU) scheme and also setting up a mechanism for advance pricing agreements on transfer pricing issues. Nasscom has also urged for the provision of refund of service tax paid on services utilized for export of computer software and BPO services in the upcoming budget for fiscal 2008-09.