Tax concessions available to units set up in free trade zones will now be phased out over 10 years, instead of becoming valid from March 31.
This will allow time to those setting up software technology parks to register their businesses.
In his reply to the debate on the Finance Bill, Yashwant Sinha offered sops to those setting up units in these zones and technology parks.
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Earlier, the cut-off date for registering a firm was March 31. Those who set up units after this date would not have been eligible for tax concessions.
This had led to a rush of entrepreneurs to register their businesses, buy and register land and machinery.
Entrepreneurs resorted to benami and sometimes illegal registration just to beat the March 31 deadline, in the fear that the tax concessions would not be available to them if they delayed setting up the company beyond the deadline.
Now, the concessions will still be available to entrepreneurs, but will be staggered. So an entrepreneur can still set up a company in March 2001, but he will get tax concessions for nine years, a company set up in 2002 will get concessions for eight years, and so on.
Sinha announced that concessions would also be available to units in IT-enabled services and special economic zones.
Concessions on domestic sales up to 25 per cent of total sales would continue, Sinha said.
Reacting to the changes, Nasscom president Dewang Mehta said, "By giving a 10-year holiday till 2010 to old as well as new software units, the finance minister has removed the class differentiation. This will proliferate at least 25,000 new units in the next 10 years and we congratulate the finance minister for the same."
Mehta added, "Based on the finance minister's sops, we have revised our projection for exports in 2000-01, and we believe that software exports growth will be in the region of 65-70 per cent instead of the earlier projection of 60 per cent growth". Nasscom has revised its projections of software exports during 2001 to $ 6.5 million.