NASSCOM (National Association of Software and Services Companies) has submitted its key recommendations to the India government to ensure sustained growth for the IT industry.
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The SMEs and technology Start-ups need an environment of constant nurturing including access to funds, incentives to support operations and a simplified compliance framework. On the other hand large enterprises require stable policies and predictable regulations to continue its global journey, said R Chandrashekhar, president of NASSCOM.
NASSCOM noted that Digital India and Make in India programs offer tremendous opportunities for the innovation driven technology Industry.
Some of the recommendations:
# Addressing regulatory and tax challenges for technology start-ups and SMEs, like
Difficulties in access to funding for low asset based firms
Investor difficulties related to regulations and taxations discouraging investors
Ambiguous Software product taxation and implementation issues adding to burden
Incentives for technology start-ups and SMEs
Extend provisions on deduction for employment and skill development (Section 80JJAA), R&D credits,
Suggestions for new provisions like Offsetting manpower training cost, deferred tax credits for start-ups
# Interest rates on penalty for service tax, for amount under litigation, should be rationalized. Rates introduced in the last budget are punitive @ 30 percent. Companies who have collected service tax but not paid to the Government should be penalized and hence a 30 percent interest rate maybe applicable to such defaulters. For others, where there is a dispute over legal interpretation on applicability of service tax, a nominal rate of interest maybe notified.
# To encourage growth of ecommerce, taxation on digital transactions should be in the least, at par with the physical world, if not reduced to facilitate adoption and migration to technology enabled platforms. This will help Government leverage the inherent transparency and traceability of online transactions.
# Towards Make in India
Extend incentives to the Indian Industry for adoption and implementation of IT tools for efficiency enhancement, ensuring sustainability and global competitiveness for the success of the Make in India program
Revoke exclusion of expenses towards software tools for R&D from weighted deduction under the DSIR guidelines to encourage adoption of advanced R&D
Policy revisions/ clarifications for expansion of the Industry
Exports– Foreign Tax Credit policy, drawback scheme for Services, carry backward of business losses
Domestic business – align royalty definition with international practices, clarify POPS rules, revisit amendments made in CENVAT rules, restore lower TDS rates on Fees for Technical Services, clarify Transfer pricing related issues some of which were addressed in the last budget but details are awaited