Govt panel wants STPI sops to stay

A high-level group on the services sector headed by Planning Commission member Anwarul Hoda has recommended that the tax holiday under the software technology parks of India (STPI) scheme be continued beyond 2009.

"If the tax holiday is withdrawn, STPIs will lose the level-playing field vis-a-vis special economic zones (SEZs). We have recommended that the government either withdraw the tax holiday to SEZs or continue the incentive to IT companies," an official with knowledge of the deliberations told Business Standard.

STPIs enjoy direct tax exemption under sections 10A and 10B of the Income-Tax Act, 1961.The benefits are scheduled to expire on March 31, 2009. There are more than 8,000 STPI-registered units in the country.

Finance Minister P Chidambaram had recently said that the government had up to March 31, 2009, to take a view on the issue.

The group headed by Hoda was set up in May to examine the different aspects influencing the performance of the services sector and suggest short- and long-term steps to improve its competitiveness.

The members of the group include secretaries of commerce, tourism and health. Wipro Chairman Azim Premji, Tata Consultancy Services MD S Ramadorai, Infosys CEO Nandan Nilekani and ICICI Bank CEO KV Kamath are among the other members of the grroup.