Sanketh Arouje, Leader – Economic Analysis Group, Dun & Bradstreet India

IT/ITES Sector 1. Continuation of the tax benefits provisions under STPI schemeIn the last union budget, the government had extended tax benefits for units in STPI by another year till March 2011. Units set up in these parks are eligible for a 10-year tax holiday if they are notified before March 2012 and become oper­ational before March 2014. Even as the DTC is expected to be introduced from April 01, 2012, it would anyway do away with the tax holiday; thus the benefit could be extended by one year. Large IT companies would be able to alleviate the tax burden arising from the expiry of tax holiday by moving into SEZs. However, SMBs, which form the bulk of the companies registered with STPI, will be severely affected, as they are still struggling in the post recession period and do not have the financial resources to face this challenge. 2. Bring STPI incentives at par with SEZ The STPIs incentives are expected to be brought at par with SEZs. The industry expects that the disparity of treatment between the STPI and the SEZ units to be removed. The government should allow the STP units to transfer under the SEZ scheme. If under the new DTC the tax holiday is not made available for the STP units, the only way in which STP units can avail of tax holiday under the DTC, would be, to shift to SEZ. 3. Increase spending on e-governance projects The industry hopes that the government will increase its focus on e-governance projects. Recently, the government has made several investments in areas such as the computerisation of its various departments and investing in programmes such as NeGP and the UID project. It is expected that the government will continue to invest in these kinds of projects which will help the domestic market grow in a sustainable manner.