Financial Daily from THE HINDU group of publications
Thursday, Jul 22, 2004
Financial Daily from THE HINDU group of publications Thursday, Jul 22, 2004 |
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Info-Tech
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Taxation Nasscom to take tax concerns to Minister Our Bureau
New Delhi , July 21 THE National Association of Software and Services Companies (Nasscom) has said that it will approach the Finance Minister, Mr P. Chidambaram, for the resolution of issues relating to BPO taxation. "We had hoped that the Finance Minister would sort out the BPO taxation issue in the Union Budget, or least give some indication, but that has not come. So we will approach the Minister for resolving the BPO taxation issue," said its President, Mr Kiran Karnik. Reiterating that software association was opposed to taxation of BPO activities, Mr Karnik said: "Our understanding of the Government's policy intent is that profit on software exports will not be taxed till 2009, and this intent should be retained, since the BPO segment is doing very well." The CBDT had, in its January 2004 circular, declared that a "considerable portion of the profits" derived by foreign entities from outsourcing of their core revenue generating business activities to India would be taxable under the Income-Tax Act if the Indian entity were to constitute a "permanent establishment (PE)" of the non-resident or foreign company in India. In cases where a non-resident company outsourced the "incidental activities" to an IT-enabled entity in India, which constitutes PE of the non-resident principal, the department had held that the "insignificant profits" from "incidental activities" can be considered as embedded in the income of the PE taxable in India.
More Stories on : Taxation | Industry Associations | Outsourcing | Budget
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