DIRECT TAX RELATED ISSUES
2.1 IT as Infrastructure
1. Declaring Electronics and Information Technology as "Infrastructure Facility" under Section 80-IA of the Income Tax Act.
The Working Group for Electronics Industry set up for the IXth Plan by the Planning Commission had recommended that the Electronics and Information Technology industry should be classified as a basic growth infrastructure industry. Based on a decision taken on 3.7.97 in a meeting of the Committee of Secretaries it had been decided special incentives for investments in the Information Technology Sector, may be considered by the Ministry of Finance. This subject was also related to a Lok Sabha Assurance wherein it was stated that action is being taken on the recommendations of the Working Group. Accordingly, recommendations were sent , for classifying Electronics & Information Technology Industry as infrastructure to MOF. Action by MoF should be expedited.
Incentives available by declaring IT & Electronics as Infrastructure facility are:
2.2 Income Tax Concessions
2.3 Service Tax Exemption
2.4 Tax Incentives for Promotion of Applications
2.5 Gift & Income Tax Exemption for PC/IT Products
No gift tax for the giver or Income Tax for the taker on PCs costing upto Rs. 50,000 for fully residential use.
2.6 Income Tax Exemption for Domestic Sale of Software
Indian Software Exporting companies may be encouraged by allowing say upto 25 percent of their domestic sales exempted from Corporate Income Tax.