A high-level committee constituted by the PM has recommended that income-tax sops for software technology parks (STPs) be extended beyond the March 31, 2009, deadline, by another 10 years.
According to government officials, the committee, chaired by Rajiv Ratna Shah, member-secretary, Planning Commission, has said this would prevent any relocation of infotech units from export-oriented units (like STPs) to SEZs. Around 6,500 infotech companies in 47 STPs across the country stand to benefit if the finance ministry agrees to the proposal. According to the officials, the tax benefits beyond 2009 for units in STPs will be at par with SEZs: 100% I-T exemption for the first five years, followed by a 50% exemption over the subsequent five years.
India it appears would continue to be the only country in which a sector is not taxed because its not doing well (agriculture), and another because it is doing well (IT). And India has one of the lowest tax to gdp ratios in the world. IT companies, first to complain about lack of infrastructure, say they dont want to be taxed because they employ people, and pay salaries to them. Tell me, which company doesnt. It might be odd for a blog on free markets to be complaining about government not imposing taxes. But this blog is also about the lobbying power of businesses. And look at the things that goverment can do with the money forgone - how many rural roads, primary health centres, schools (or ideally, education vouchers)
1 comment:
hi
maybe we should look at market forces acting which may not be tax based. for example in the case of IT SEZ what the govt is doing now may be pro markets. al ot of IT cos invested in space and infra without taking into account the SEZ rules. now, if the SEZ laws take effect they may be forced to abandon or minimally utilize existing resources, which is a national waste. by extending the tax benefits at existing locations, it can be ensured a better utilization of physical resources.
also, to take advantage of the SEZ rules, IT cos could be set up is areas much further from residential areas than they already are. this would require IT workers to commute for much longer period of time. the effect this has on family and social life will be disastrous , while it may be difficult to measure in economic terms.
while google engineers spend 20% of their time on pet projects, indian pros may have to spend more time reserching transportation networks! that may not be fair competition.
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