The BPIAI, an affiliated association of industry body of the CII, in its pre-Budget session which would be presented before the Finance Minister for considerations, said a special BPO department or Ministry in the government should be set up and the government should consider the Business Process Outsourcing (BPO) sector as a separate industry from the IT segment and device a proper mechanism to determine its export turnover.
Unless the Government takes a very proactive stand to the BPO segment, a lot of the cost advantages that are this country's have might dissipate, it added. Besides, BPIAI has also suggested the extension of tax holidays for STPI units for 20 more years, withdrawal of MAT, introduction of advance pricing arrangements for transfer pricing, abolition of FBT on ESOPs and simplification of tax holiday provisions.
Extending the STPI scheme will also help offset the losses incurred due to the movement of rupee, which has appreciated by 13 per cent since April 2007 and has drastically hit the bottom-line BPOs, it added.
Samir Chopra, President, BPIAI said the government stands to lose more in terms of indirect taxes than it will gain from taking away the tax breaks. The business process wants tax sops not only for its international business that generate foreign exchange but also for the fast growing domestic segment which is generating huge amount of employment opportunities in tier 3 - tier 4 cities and in remote towns and villages which is something the IT industry is unable to do.