“Tax breaks are provided to support an industry at early stage. IT industry has grown and gained strength. Though, no final decision has been taken but I do not think STPI benefit would be extended,” CBDT Chairman R Prasad told reporters here on the sidelines of a tax seminar organised by Bharat Chamber of Commerce.

“Exemptions are not perpetual. There has to be sunset clause,” he said.

The IT industry was disappointed for non-mention of extension of tax breaks for the STPI and IT EOUs in the recent budget.

The Union Finance Minister P Chidambaram has said the government has time till March 2009 to decide on the subject.

However, the industry believes by then the damage will be done for the small IT players who will be most affected as large players would move to SEZs to continue for deriving benefits. Nasscom has estimated impact of STPI on job loss to be about 4,00,000 in 3-4 years. Over 1,000 BPO units would suffer a severe blow. At present, tech companies are paying MAT at 11.33 per cent and it was expected to go up to 20 per cent.

Plea rejected

Further, Mr Prasaid said, Minimum Alternate Tax will continue despite apprehensions from the industry. “MAT is levied on only those who have some tax exemptions under law and they have to pay taxes only if they book profit,” Mr Prasad said ruling out Bharat Chamber of Commerce members’ demand of abolishing MAT.

With PAN number mandatory in several cases, filing of tax returns have increased by one lakh, he said.

On sale and purchase of securities within one year, Mr Prasad said, “It would continue to depend on the tax officials interpretation as CBDT cannot take an opinion on it as it remains to be a grey area and it has to be evaluated on case-to-case basis.”