Budget 2014: Nasscom for Extension of Sops to IT Firms in Non-Metro Cities

The sops being given to the IT firms in metro cities should be extended to companies in tier 2 and 3 cities as it will generate greater employment opportunities and boost growth, industry body Nasscom has said.

"In order to generate employment in tier-2 and tier-3 cities, Nasscom recommends incentivisation for expansion into such towns and cities aiming at spreading employment opportunity, ensuring balanced growth, drive urbanisation across the country and encourage overall competitiveness of the industry," it said in its pre-Budget expectations.

Besides, Nasscom has also recommended launching of an India Technology Entrepreneurship Mission (ITEM) to provide a supportive framework to technology start-ups and SMEs.

Under this mission, difficulties related to taxation, regulations and funding environment are to be identified, Nasscom said.

"Allocations made to address them will ensure a framework for funding and investments in low asset base and IP-driven early and growth stage of start-ups", it said.

The proposed mission will provide simple regulatory requirements, give incentives for intellectual property creation and generate employment, which would make policy interventions to mitigate cumulative tax liability from TDS, service tax, VAT and prevent depleting cash due to needless temporary cash outflows towards taxes, Nasscom said.

Nasscom has also urged the government to streamline procurement process for technology products and services including SME participation, settle long-pending dues on projects executed for central and state government and provide incentives for adoption of IT across sectors.

"The government must clarify about royalty implications on software, eliminate MAT on SEZ and take steps to minimise litigations", the statement added.

The government should work towards addressing challenges of negative list like taxation of testing services as well as transactions between head office and branch office, the release said.

Nasscom has urged the government to renegotiate tax treaties, ensure cross-border transfer pricing adjustments and introduce consolidated income tax filing for Indian MNCs since it will ease compliance for industry and the government.