<p>India is the world’s largest sourcing destination for the IT industry. IT sector accounts for around 18% of the total Indian exports.<br /><br /></p>.<p> There are few expectations of the IT & ITes Industry from the upcoming Budget, which will enable it to maintain its competitive edge in the global market. <br /><br />Phasing out of exemption.<br /><br />At present, there is no sunset clause under section 10AA, which provides for deduction in respect of profits derived from export of articles or things or services (including computer software) by a unit located in a Special Economic Zone. However, as a step towards phasing out of deductions, a sunset date of March 31, 2017, for commencement of activity has been indicated as per the government. <br /><br />Section 80JJAA deduction <br /><br />Section 80JJAA of the Income Tax Act incentivises employment generation in the manufacturing sector by providing them tax incentive of 30% on the additional wages paid to the new regular workmen, subject to certain conditions.<br /> <br />As such, this sector should also be incentivised by extension of the tax breaks provided in this section. In addition to this, it is recommended to extend the benefit of deduction under section 80JJAA of the Act to assessees engaged in the business of providing service to provide impetus to the growth of the service industry in India, and will also generate employment opportunities.<br /><br />Provisions for startups<br /><br />The government of India has recently come up with the framework for the startups. The scheme provided for certain tax breaks to be provided to the startups such as exemption from capital gains tax, tax exemption for 3 years, exemption from the provisions of section 56 (2) (viib), etc. As such, it is expected that a separate chapter be introduced in the Income Tax Act to provide a separate taxation regime for the eligible startups. This step would play an important role in encouraging the entrepreneurial spirit amongst the youth and the startup movement.<br /><br />(The author is executive director, RSM Astute Consulting Group)</p>
<p>India is the world’s largest sourcing destination for the IT industry. IT sector accounts for around 18% of the total Indian exports.<br /><br /></p>.<p> There are few expectations of the IT & ITes Industry from the upcoming Budget, which will enable it to maintain its competitive edge in the global market. <br /><br />Phasing out of exemption.<br /><br />At present, there is no sunset clause under section 10AA, which provides for deduction in respect of profits derived from export of articles or things or services (including computer software) by a unit located in a Special Economic Zone. However, as a step towards phasing out of deductions, a sunset date of March 31, 2017, for commencement of activity has been indicated as per the government. <br /><br />Section 80JJAA deduction <br /><br />Section 80JJAA of the Income Tax Act incentivises employment generation in the manufacturing sector by providing them tax incentive of 30% on the additional wages paid to the new regular workmen, subject to certain conditions.<br /> <br />As such, this sector should also be incentivised by extension of the tax breaks provided in this section. In addition to this, it is recommended to extend the benefit of deduction under section 80JJAA of the Act to assessees engaged in the business of providing service to provide impetus to the growth of the service industry in India, and will also generate employment opportunities.<br /><br />Provisions for startups<br /><br />The government of India has recently come up with the framework for the startups. The scheme provided for certain tax breaks to be provided to the startups such as exemption from capital gains tax, tax exemption for 3 years, exemption from the provisions of section 56 (2) (viib), etc. As such, it is expected that a separate chapter be introduced in the Income Tax Act to provide a separate taxation regime for the eligible startups. This step would play an important role in encouraging the entrepreneurial spirit amongst the youth and the startup movement.<br /><br />(The author is executive director, RSM Astute Consulting Group)</p>
