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Nasscom pitches for I-T waiver for NRIs outsourcing jobs
By siliconindia
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Thursday, 14 December 2006, 18:30 IST
New Delhi: In its pre-budget memorandum, the National Association of Software and Services Companies (NASSCOM) has recommended a slew of measures for boosting the robust Indian IT sector. One of the primary proposals seeks to remove concerns of non-resident-Indians, and boost the BPO industry in the country.
The industry body has sought clarifications in the Indian income tax legislation from the government and has recommended tax exemption for NRIs outsourcing their back-office processing and call center activities to India. Itâs proposed âconsolidated tax returns for group entitiesâ scheme, it is hoped, will eliminate economic distortions on account of inter-company transactions within a group.
This might effectively rein in practices of tax avoidance that the groups resort to by indulging in intra-group dealings, loss cascading and value shifting. As per Nasscomâs proposal, tax effects on the dividends paid between companies would also be eliminated.
In consideration with foreign tax credit policies, the body has asked for the incorporation of relevant provisions in the domestic law and rationalization of transfer pricing rules.
Nasscom has further suggested that the Advanced Pricing Agreement (APA) be followed in the coming budget. The APA practice is already in place in countries such as the US, Canada and Mexico, China, Taiwan, Korea, Japan, Australia amongst others.
While the new measures are part of Nasscomâs wish list, it has also sought the continuation of tax exemption for Software Technology Parks beyond the present 2009 benchmark, so that companies coming to India could continue to avail of the benefits and have ample time to adjust to the yet nascent SEZ framework. The SEZ framework will take off in full swing in the next two-three years. Nasscom wants the extension of tax holiday to be made at par with those provided to exporting units operating out of SEZs.