Indian government officials held talks with their Japanese counterparts last week in a bid to persuade Japan to remove a withholding tax imposed on the subsidiaries of Indian software firms.
Whilst India currently exempts software developers from tax liability, the Japanese place a tax of 20% on the subsidiaries which, it is claimed, increases the cost of software development by 25%.
"It is (a) mutual problem. They also have problems with us. We discussed that," Union IT and Communications Minister Dayanidhi Maran told reporters after meeting with Toshimitsu Motegi, his Japanese opposite number.
“It is clear that Japan is looking at us differently. They see our software potential and capabilities which also include the defining as well as software embedded technology. We are trying to use their hardware expertise", he added.
Officials are due to meet within the next couple of weeks to discuss the formulation of a working group to build relationships between the two sides in the field of IT, as well as addressing other outstanding issues, the minister stated.
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