India to mull tax sops for IT firms: Kapil Sibal

NEW DELHI: India will consider giving tax sops for information technology companies after the direct tax bill comes into affect, Federal Telecoms and Information Technology minister Kapil Sibal said on Friday.

India is trying to pass a bill in parliament to overhaul its archaic direct tax laws, a key reform aimed at simplifying procedures for investors and bring in more revenue by widening the tax net.

"We will certainly try and do something," Sibal told reporters without giving details.

A spurt in tax rates due to expiry of the Software Technology Parks of India ( STPI) scheme earlier this year has hurt margins and crimped profits at Indian IT firms.

The downgrade by credit ratings agency Standard & Poor's in August had triggered concerns that the $ 60 billion software services industry - which gets more than 60 per cent revenues from the US market - would be hit.

Major IT and BPO companies in the country are jittery amid fears of another economic slump in the US and a debt crisis in Europe, according to industry body Assocham.

"The US and Europe account for over 80 per cent of India's $ 60 billion IT industry and macro-economic uncertainty in these parts of the world are bound to make the market gloomy," it further added.

Besides, the industry is already reeling under high interest costs, high inflation and the stock market is also in a sombre mood, the study added.

However, IT industry body Nasscom, exuded confidence that the sector will "sail through" the crisis. The Indian IT sector will not be impacted much by recessionary trends in Europe and the US as the industry is poised to grow on increasing domestic demand and by tapping new markets outside the West, Nassocm had said.