NASSCOM disappointed over STPI Scheme silence in budget

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Mumbai, Feb 29 (UNI) The voice of the Information Technology industry in India, National Association of Software Services Companies (NASSCOM), today expressed disappointment over the lack of mention of extension of STPI scheme to the sector and felt imposition of service tax on customised software and higher excise duty on packaged software can slow down domestic IT growth.

NASSCOM, however, joined the IT-BPO industry in welcoming the budget as it was ''inclusive and has a strong focus on the social sector''.

On the STPI scheme, which would end on March 31, 2009, NASSCOM said that the extension was extremely critical for small enterprises and the BPO industry, as well as for expansion in tier 2 and tier 3 cities as they are unable to avail the benefits of the SEZ scheme.

''We are hopeful that through continued dialogue we will be able to convince the Government to consider our proposal and help India garner the large opportunity in this sector'' NASSCOM said in a release.

''We have seen the advantage of IT deployment in the country.

However, the imposition of service tax of 12 per cent on customised software and higher excise duty on packaged software could lead to increased cost of IT and could slow down the IT usage in the domestic sector'' it said adding that the impact would be more on small and medium enterprises, who have just started deploying IT.

NASSCOM said ''The IT-BPO industry is talent and skill intensive and in this light, we particularly welcome the thrust on primary and higher education and skill building initiatives. The Sarva Shiksha Abhiyan1, increased allocations for higher education and the creation of the Skill Development Mission with the announcement of Rs. 1,000 crore as Government's equity in this proposed non-profit corporation will ensure constant supply of employable workforce to this sector. Interconnecting the knowledge institutions through broadband would also establish synergies across educational institutions''.

Welcoming the new initiatives on setting up rural service centres and state data centres, NASSCOM said they would help take the benefit of IT to the masses.

''While the Budget does resolve some existing anomalies, we would continue our dialogue with the Government on removing the inequities and procedural issues such as those relating to provisions of Section 10AA for units in SEZ, advance pricing agreements etc'' the IT trade body said.

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