IT industry meets Anurag Thakur on tax woes ahead of Union Budget

Officials have requested ministry to retain tax-friendly SEZ policy

Ahead of the Budget, representatives of the tech sector and industry bodies Nasscom, Internet and Mobile Association of India (IAMAI) and MAIT met Minister of State for Finance, Anurag Thakur, on Saturday. 

The industry officials sought to discuss various issues such as the tax structure, and to share their views on strengthening the digital economy.

The pre-Budget consultation meet also focussed on data issues like the use of Big Data in improving the forecasting of economic, financial, as well as climatic phenomena, by analysing large data sets. 

They feel these could give a fillip to the SME sector and public governance, said an official statement. 

Other issues discussed were digital infrastructure and role of the government, regulation of the digital economy (especially in privacy), consumer protection, financial regulation, and software as a service, among others, the statement said.

The meeting was also attended by officials from the Finance Ministry, Electronics & IT Ministry, Department of Telecommunications, the Central Board of Direct Taxes, and others.

“The representatives of digital economy and start-ups shared their views and suggestions regarding Big Data, data mining, building of digital infrastructure as the big challenge before the Indian economy, besides scaling up and incentivising research and development (R&D) within India. 

“While the experts discussed the issues ailing their respective fields, they also suggested a variety of solutions to sector-specific problems,” the official statement added. 

Development of start-ups and the micro, small and medium enterprises (MSME) ecosystem in the country also featured, it added.

The representatives gave feedback related to angel tax, differential tax structure for assembled and manufactured goods, industry-friendly review of spectrum auction norms, reduction of dependence on international software service, continuation of existing tax benefits to digital companies, and reduction in corporate tax rates, among others.

“We urged the government to deal with the angel tax issue urgently. In February, the government had considered Section 56 (2) of the Income Tax but notices have been served under Section 68,” IAMAI President Subho Ray told PTI.

 “This, we believe, is not only unfair to foreign digital companies operating in India, but also fear that the same parameter could be extended to domestic players as well. In a country like India that is rapidly adopting digital platforms, such a move would be a slippery slope for growth,” he said.

IT body Nasscom has urged the government to continue tax incentives to units in special economic zones beyond March 2020, saying that such a move will provide industry with certainty and enable them to invest in long-term strategy.

The body — which represents an industry earning over $130 billion in foreign exchange — has suggested that the new tax-friendly Special Economic Zone (SEZ) policy should retain existing tax benefits and provide concessional rate of 9 per cent Minimum Alternative Tax.

Other participants included representatives from Telecom Equipment Manufacturers Association of India (TEMA), Broadband India Forum, Electronic and Computer Software Export Promotion Council, Manufacturers Association for Information Technology (MAIT); ELCINA (Electronic Industries Association of India), as well as the Indian Cellular and Electronics Association.