Indian Government Seeks To Resolve Confusion Over IT Tax Breaks

by Lorys Charalambous, Tax-News.com, Cyprus

22 April 2004

The Indian government reassured the country’s IT firms on Tuesday that it has not withdrawn tax breaks for businesses in the software sector, following several cases where individual firms have apparently been refused the tax incentives in question.

By way of explanation, revenue secretary Vineeta Rai told reporters that the refusal by the authorities to grant tax breaks may in some cases be due to an “interpretation problem”, where an assessing officer disagreed with the company’s claims.

“A judicial process is on. We will wait to see the outcome of this process and if there is any grey area, we could then consider taking appropriate steps,” Rai stated, referring to one case where a firm has appealed against its assessment order.

Meanwhile, the chairman of the Central Board of Direct Taxes (CBDT), P L Singh, confirmed that the government has "not changed any of the provisions of law which grants tax holidays for software units located in software development parks and technology parks."

"Neither have we issued any circular introducing any change in the manner software firms may be taxed,” he added.

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