The Government may extend tax exemption benefits to small and medium IT companies beyond 2009 even after the Software Technology Parks of India (STPI) scheme expires, said IT and Communications Minister A Raja in Rajya Sabha during the Question Hour on Thursday.

“I have met Prime Minister (on the issue). PM is inclined to give some relief.... We are of the view that small and marginal enterprises should not suffer. The matter is under consideration,” Mr Raja said. The sunset clause under Section 10A/10B of the Income Tax Act of 1960, exempts the IT firms registered with STPI from corporate taxes for 10 years. The deadline expires on March 31, 2009.

Not for biggies

Mr Raja said he had also met Finance Minister P Chidambaram on extending tax break for another 10 years but the “Finance Minister had some reservations”.

The extended tax breaks should not go to big and flourishing companies who have already utilised previous tax breaks, he said, but did not specify when a decision would be taken. He said slowdown in the US economy has so far not had any significant direct impact on the growth of the Indian IT-BPO sector. However, the depreciation of US dollar over the past year has added significant margin pressure on the IT industry.