IT cos in trouble as tax sops near end
Should the government extend tax benefits to IT/ITeS companies? What's your say? Write to us.
By Chhavi Dang, TNN |
MUMBAI: The clock is ticking for the Indian IT/ITeS industry. In ‘09, the tax break given under section 10A and 10B to the IT and BPO companies technically comes to an end. There has been no communication from the government so far on whether it plans to extend the tax benefit. However, the companies are going ahead with acquiring land to expand their facilities.
The IT and ITeS companies looking for a tax holiday have two options — either they move into a special economic zone (SEZ) or acquire land and get it approved as an SEZ. Many big IT and ITeS companies like Wipro, Satyam, TCS and Genpact have applied for SEZ and are awaiting government nod. They have applied for smaller pieces of land in states like Tamil Nadu, Orissa, West Bengal, Andhra Pradesh and Gujarat. But none of them have got a clearance on the same.
Moving to SEZ has its own problem. For smaller players like 3Global, a Mumbai-based captive of Hutchison-Whampoa, who can’t set up their own SEZ, the traveling time to office will also increase.
Sanjay Luthra, director, 3Global says, “For cities like Delhi and Mumbai, attracting BPOs to SEZs may be a challenge because the land is available at the outskirts and employees may not like to work there. So the government has a challenge on attracting companies to open offices in SEZs located at such places. The net result for such call centres may go to smaller cities where SEZs are situated within city limits.”
Many players who are setting up an SEZ are asking for higher rentals than the market price which is a de-motivator for companies to start their operations.
Should the government extend tax benefits to IT/ITeS companies? What's your say? Write to us
The IT and ITeS companies looking for a tax holiday have two options — either they move into a special economic zone (SEZ) or acquire land and get it approved as an SEZ. Many big IT and ITeS companies like Wipro, Satyam, TCS and Genpact have applied for SEZ and are awaiting government nod. They have applied for smaller pieces of land in states like Tamil Nadu, Orissa, West Bengal, Andhra Pradesh and Gujarat. But none of them have got a clearance on the same.
Moving to SEZ has its own problem. For smaller players like 3Global, a Mumbai-based captive of Hutchison-Whampoa, who can’t set up their own SEZ, the traveling time to office will also increase.
Sanjay Luthra, director, 3Global says, “For cities like Delhi and Mumbai, attracting BPOs to SEZs may be a challenge because the land is available at the outskirts and employees may not like to work there. So the government has a challenge on attracting companies to open offices in SEZs located at such places. The net result for such call centres may go to smaller cities where SEZs are situated within city limits.”
Many players who are setting up an SEZ are asking for higher rentals than the market price which is a de-motivator for companies to start their operations.
Should the government extend tax benefits to IT/ITeS companies? What's your say? Write to us
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