Karnik says tax regime may slowdown IT sector
New Delhi: Nasscom President Kiran Karnik said there may be a possible slowdown in the momentum of India's Information Technology (IT) exports after 2010, due to the recent tax impositions on the sector.

He said though the IT sector would meet its current export targets but there might be a slowdown after that he said.

According to a study commissioned by Nasscom, India's IT-ITeS exports are expected to cross $31 billion in the current calendar year and are expected to exceed $60 billion by 2010.

As per the Finance Minister's budget announcement, IT industries have been brought under the Minimum Alternative Tax (MAT) bracket while Employee Stock Option Plans (ESOP), very popular with IT companies, have been brought under the purview of fringe benefit tax.

In a post budget statement issued by Nasscom, Karnik had said that companies were "dismayed" at the proposal to extend MAT on export incomes, which were exempt under Sections 10A and 10B. He added this move could "affect investor confidence and growth in this sector which is not only India's biggest exporter ($31.6 bn in 2006-07) but is the biggest employer in the organised private sector."
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Govt ready to correct SEZ policy: PM
New Delhi: Prime Minister Manmohan Singh said the government is ready to change the approach to SEZs 'if it had made a mistake' and that land acquisition and resettlement has to be done in a humane manner.

The Prime Minister said External Affairs Minister Pranab Mukherjee was heading a Group of Ministers to review the approach to SEZs.

Referring to the issue of land acquisition, Singh said the issue has to be dealt with in a more "humane" manner. There has to be a "more humane rehabilitation and resettlement policy for those whose land has been taken away," he said.
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FIEO against imposition of MAT
New Delhi: The Federation of Indian Export Organizations (FIEO) has expressed disappointment on the imposition of MAT on Sec 10A & 10B of the Income Tax Act.

Dr R K Dhawan, chairman, FIEO stated that the imposition of MAT at this juncture when the tax holiday on the said sections have a sunset clause (valid till 2009) tantamount to reneging on commitments made by the Government to the trade & industry including the IT sector.

While the export sector is suffering high transaction costs, and competitor countries (like Malaysia, Indonesia & China etc) are offering attractive tax havens to investors, in such a scenario the imposition of MAT would further reduce the competitive edge making India less investor friendly.

Dr Dhawan stated that the levy would entail an additional tax liability of 11.22 pc of the adjusted book profits further reducing competitiveness.
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