New Delhi: The Government may extend income tax holidays to small and marginal IT firms beyond 2009, IT and Communications Minister, A Raja, said on 17 April.
Exemption from paying tax for IT companies is to end in 2009.
“I have met the Prime Minister (on the issue). The 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,” he told the Rajya Sabha during the Question Hour.
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 used previous tax breaks, he said, but did not specify when a decision would be taken.
The Minister said the slowdown in the US economy has so far not had any overall significant direct impact on the growth of the Indian IT-BPO sector. However, the depreciation of the dollar over the past year has impacted margins of the IT industry.
Raja said industry body Nasscom does not have any information on reduction in salaries in IT industry but there had been indications that the annual increments to employees may be slightly lower.
Nasscom has indicated that the data on salary cuts if any would be available only after the analysis of the annual results to be announced by the companies.
Raja said it is estimated that IT exports will be around $40.3 billion in 2007-08 as against $31.3 billion in 2006-07, a growth of 28.3%.
“However, the outlook for business in the coming year is still cautious, as US clients appear to be delaying their IT-BPO budget decisions,” he said.
Further direct employment is expected to grow by 23% to reach around 2 million in 2007-08. This is an increase of about 375,000 professionals over 2006-07.