IT firms to benefit after government clarifies on taxes

BANGALORE Thu Jan 17, 2013 8:27pm IST

Workers are pictured beneath clocks displaying time zones in various parts of the world at an outsourcing centre in Bangalore February 29, 2012. REUTERS/Vivek Prakash/Files

Workers are pictured beneath clocks displaying time zones in various parts of the world at an outsourcing centre in Bangalore February 29, 2012.

Credit: Reuters/Vivek Prakash/Files

Related Topics

Stocks

   
Priyanka Gandhi Vadra, daughter of Congress party chief Sonia Gandhi, adjusts her flower garlands as she campaigns for her mother during an election meeting at Rae Bareli in Uttar Pradesh April 22, 2014. REUTERS/Pawan Kumar

Election 2014

More than 814 million people — a number larger than the population of Europe — are eligible to vote in the world’s biggest democratic exercise.  Full Coverage 

BANGALORE (Reuters) - India's $100 billion IT outsourcing sector, which earns the bulk of its revenue from exports of software services, won a long-sought and favourable clarification over the tax treatment of some of the money it earns overseas.

Profits from software developed overseas by Indian companies and from fees for sending staff abroad to client locations will get the same exemptions that the industry gets at home under Indian tax laws, the government said in a statement on Thursday.

"Overall, it's a positive move. It's a welcome measure that clears the air and avoids future litigation," S. Balasubramaniam, chief financial officer of Zensar Technologies (ZENT.NS), an Indian outsourcer, told Reuters.

In one instance involving such taxes, No.2 outsourcer Infosys Ltd (INFY.NS) is contesting tax claims of about 14 billion rupees, including interest, related to the fiscal years 2005-2008, the company said in a recent quarterly filing with the U.S. Securities Exchange Commission.

Infosys said it was "delighted" with the clarification.

"It removes one big uncertainty for the industry," the company said in a statement.

The National Association of Software and Services Companies, or NASSCOM, an industry lobby, said the government's clarification was a positive step.

"We urge that benefits denied in the past be reviewed in light of this move and there be swift closure of cases for the industry to benefit from this," NASSCOM said.

(Additional reporting by Manoj Kumar in New Delhi; Editing by Tony Munroe and David Holmes)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Telecom Sector

REUTERS SHOWCASE

Election 2014

Election 2014

Breakingviews: Singh wasn’t king, Modi could be  Full Article 

Monsoon Forecast

Monsoon Forecast

Met office rules out surplus monsoon in 2014.  Full Article 

Solar Dispute

Solar Dispute

Green groups urge U.S. to drop solar trade case against India.  Full Article 

Rice Exports

Rice Exports

India may cede top rice exporter spot under Southeast Asian price onslaught.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage