More tax sops likely for software exports

The government is planning to provide greater tax benefits to software exporters under the software technology park of India (STPI) scheme to bring them at par with the benefits offered in the special economic zones (SEZ).

At present, while the SEZ policy offers tax benefits for 15 years, software exporters are entitled to 100 per cent tax exemption only till 2009 under the STPI scheme. "The government is finalising a proposal to offer more tax benefits under the STPI scheme to bring them in line with those in SEZs," senior government officials said.

The Department of Information Technology (DIT) had recently submitted a proposal to the commerce department for extending the same tax benefits under both the schemes. While both the schemes allow for exemption from octroi charges and central sales tax, the tax benefits offered under the SEZ scheme are acting as a deterrent for exporters towards setting up units in software technology parks.

"The incentives offered under the SEZ scheme have ensured that there are fewer takers for the STPI scheme. While this augurs well for the big players in the software industry, the 4,400 small exporters are at a disadvantage as they do not have the wherewithal for SEZ infrastructure," an official said.

The infrastructure for an SEZ is typically suited for manufacturing and not software export, the officials said. "Since the infrastructure in an SEZ best suits manufacturing, to promote software exports it is imperative that the benefits are equalised," an official at STPI said.