The Internet and Mobile Association of India (IAMAI) has sought tax benefits in the upcoming Budget for Internet and mobile value added service (VAS) companies to help boost the industry's growth.
In a pre-Budget memorandum sent to the Finance Ministry, IAMAI recommended that Internet and mobile content and service providers, transactions on both the platforms as well as firms providing Internet and broadband connectivity should be exempted from income tax for 10 years.
The body also suggested fiscal benefits for e-commerce in form of waiving off sales tax for the next 5 years on goods and services that are transacted through electronic mode.
This recommendation should be then followed with legislation to ensure execution by the state governments, IAMAI said in a statement.
A five-year moratorium on service tax would allow the nascent industry to grow in size and stabilise and be in a position to accept additional tax responsibilities, it said.
The tax on services like online advertising or online classifieds etc should be reduced from 10.36 per cent currently to zero in order to encourage online community.
"Everyone recognises that the digital industry is capable of delivering huge positive externalities, especially for rural areas. It is time that the industry should incentivised to do so," IAMAI President Subho Ray said.
