NASSCOM seeks amendment to tax exemption norms on income from SEZs

[K.Karthik Raja]

NASSCOM seeks amendment to tax exemption norms on income from SEZs
Tuesday, Jun 17

MUMBAI - NASSCOM is seeking amendment of tax norms on information
technology companies' income from special economic zones, Chairman
Ganesh Natrajan told

"The issue has been under consideration for nearly a year now,
because given the current rule, only a fraction of the income from
SEZs is tax free, which takes away a large amount of the benefit of
moving to SEZs," he said.
A newspaper report today said that not the entire income from SEZ
units of IT companies would be exempt from tax.
According to the report, only a part of the profit, based on the
share of exports of the SEZ unit to the total turnover of the company,
will be exempt.
This means that if 10% of the company's revenue is derived from an
SEZ, 10% of the SEZ's income will be exempt from tax, Natrajan said.
Currently, all export income of IT companies is exempt from tax
under the Software Technology Parks of India scheme, which will expire
in March 2010.
Income from SEZs is seen providing tax relief to IT companies from
2010-11 onwards, when their entire export income will be taxable.
Natrajan noted that for companies that already have units in SEZs,
lack of an amendment will not make much of a difference, only their
tax liability would rise. But for companies looking to move to SEZs,
the total cost of moving vis-a-vis the benefit will be ineffective, he
said. End