Software piracy caused tax loss of USD 866-mn in 2009: Study

Pune, Jun 4: In a significant finding, a study has claimed that the Indian government had suffered huge revenue losses to the tune of USD 866 million in 2009 on account of the high rate of software piracy in the country.

Businesses, who are otherwise legitimate, use software on a large scale but they evade paying tax when they are not buying licensed software, thus causing a big loss to the state exchequer and disruption of the domestic software eco-system, says an International Data Corporation (IDC) whitepaper, "Software Piracy in India", sponsored by Business Software Alliance (BSA), released here.

Despite the growth in the Information Technology (IT) sector, substantial value in form of potential revenues is lost due to software piracy. With a software piracy rate of 65% in 2009 (more than six out of ten PC software programs installed in 2009 were not paid for), the study finds that only one-third of the overall PC software revenues are captured by the industry incumbents and the rest are lost to software piracy.

Consequently, in 2009, the state exchequer tax receipts loss was approximately USD 866 million in net taxes, both indirect and direct, it notes.

According to IDC estimates in the study in 2009, 65% software piracy of packaged software caused a loss of commercial value of unlicensed software totalled over USD2.27 billion causing the domestic economy to lose USD 5.3 billion of software, services and channels revenues to software piracy.

Consequently, the state exchequer tax receipts loss was roughly USD 866 million at the current piracy and employment levels, as the industry lost its otherwise legitimate share of revenues to pirates, the paper has stated.

PTI