Highlights of Indian Budget for software Industry...

Highlights:

• Tax exemption to on-site services
• Tax exemption for M&As of IT firms in special zones
• Sales to DTA by firms in STPs EPZs and FTZs to be taxed.
• Five-year tax holiday for broadband and ISPs
• Five-year tax holiday extended for new telecom companies
• Dividend tax cut to 10% from 20%
• Tax exemption on overseas foreign loans withdrawn
• Govt to tax online information services
• Profits from on-site software services exempt from tax
• Tax exemption for STP and EPZ units
• 10% surcharge on corporate tax scrapped
• 1% calamity surcharge on companies to continue
• 10% custom duty surcharge abolished
• Service tax on online database retrieval services
• Service tax on ISPs, paid email services
• 100% tax exemption for tech education
• Customs duty on select telecom, IT equipment down 15%
• Custom duty surcharge abolished
• Three SAD slabs of 8%, 16% and 24% streamlined to a single slab of 16%.
• Automatic approval to lay off for firms with 1,000 staff Labour Retrenchment Policy relaxed
• Govt to privatise VSNL
• Passport offices, banks, licence offices, PSUs and insurance offices to be fully computerised by March 2002.
• More IT-related courses to be offered in all the 43 RECs
• Teledensity in the country increased to 3.5 per 100 by March 2001
• Indian earnings in Esops can be used to invest abroad
• Firms to be allowed to invest upto $50 m abroad
• Divestment target pegged at Rs 12,000 cr
• Privatisation of government firms to be speeded up
• Convergence Bill will be introduced soon in an integrated manner
• Automatic approval for FDI up to $50 m
• Companies allowed to buy up to $100 m equity in foreign firms
• Companies can invest all ADR/GDR proceeds abroad
• FII ceiling hiked to 49%
• RBI to set up electronic funds transfer system

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