IT tax sop scheme might extend beyond 2009

The Indian government is likely to extend the tax-free software technology parks of India (STPI) scheme beyond 2009, a central minister said on Wednesday.

"The STPI scheme, initially brought out to develop IT industry in the country, might be extended so that IT industry continues to achieve its stupendous growth," said Communications and IT Minister A. Raja here.

He was addressing the India Leadership Forum 2008 organised by the National Association of Software and Services Companies (Nasscom).

The minister said his ministry was in complete sync with the demands of the STPI and special economic zone (SEZ) schemes for the industry and was pushing its case.

The STPI scheme, which is set to expire in 2009, provides a 10-year income tax exemption for units situated in software technology parks. Nasscom had Monday sought the extension of the STPI scheme.

While large companies could move over to SEZs, small and mid-sized companies were finding it difficult to follow suit owing to cost barriers. SEZs are mostly located in and around large cities.

Raja said his ministry is trying to extend the concessions currently available to SEZs.



He lauded the IT industry for achieving its targeted growth despite global recession and a strong rupee.

"I am deeply impressed that the IT industry is on par to reach $60 billion in revenues by 2008 and provide employment to two million people, an increase of 370,000 over the previous year."

Raja called upon the IT industry to come out with innovative products and services to help reach the rural India.

"Eighty per cent of the population is bereft of Internet connectivity and the IT industry should come with affordable products and services so that the fruits of IT revolution will reach the masses."

Raja also said the IT Ministry was planning to develop tier I and tier II cities into major IT hubs.