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This story is from September 25, 2007
IT cos worried over tax sops
IT companies fear that in case the sops are not extended, they may lose many international clients.
IT companies fear that in case the sops are not extended, they may lose many international clients. A CEO of a BPO firm said firms like his were attracted into the country on the back of tax breaks.
‘‘If these breaks are not extended, international clients will move to other tax friendly countries like the Philippines or Mauritius,’’ he added.
For those in the IT business, the minister’s remarks add to their already overflowing cup of woes. The stock markets have not taken kindly to the business since the time the rupee started to appreciate a few months ago. Indian IT companies derive a significant portion of their revenues from the US in dollars.
These dollars, in turn, are used to buy rupees and run their operations in India. As the rupee gets stronger, the dollar can buy fewer rupees but the cost of operations remains the same and companies are affected badly.
But as many in the industry see it, if government does not accede to the lobbying, they will move into SEZ being built. Firms located in SEZs can take advantage of a 10-year tax holiday that the government is offering in an attempt to make SEZs viable.
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