(a) the annual growth rate of software and service provider companies of the country during
the last three years and the current year;
(b) whether the annual growth rate is even less than the annual average growth rate during
the last three years;
(c) if so, the details thereof and the reasons for such decrease in the annual growth rate:and
(d) the steps taken by the Government in this regard?
MINISTER OF THE STATE IN THE MINISTRY OF COMMUNICATIONS AND INFORMATION TECHNOLOGY (SHRI SACHIN PILOT)
(a): The annual growth rate of Software and Services industry(exports plus domestic) during the last three
years is given in Annexure. During the FY 2009-10, the average annual growth rate is estimated at 9.5 %.
The software production and export data for the fiscal year 2010-11 will be available next year.
(b) and (c): During the FY 2009-10, the annual growth rate has been less than the annual average
growth rate of the last three years. During this period, the annual growth rate has declined due
to global economic slowdown as over 75% of the total software and service revenue of the country
is from exports.
(d): Government extends several incentives for Information Technology Sector in the country. Under Software
Technology Parks (STP) scheme, approved units are allowed to import goods required by them for carrying on
software export activities as per the Foreign Trade Policy. Such goods may be imported either on outright
purchase basis or free of cost or on loan basis from the client without payment of custom duty. Apart from
this, the approved STP units can avail excise duty exemption on procurement of indigenously available capital
goods, components & other specified goods.
In addition, the tax benefits to units located in Software Technology Parks under the provision of Section 10A
of the Income Tax Act, 1961 which was initially available upto assessment year 2010-11 has been extended upto
assessment year 2011-12.
Apart from this, other IT equipment, which are in the nature of capital goods, attract concessional customs
duty rate of 7.5%. Software is exempted from basic customs duty. Also, software downloaded from Internet is
exempt from customs duty. Telecom software is exempted from customs duty and Excise duty/Countervailing duty.
Furthermore, several items for the IT sector are covered under the ITA Agreement, and hence exempted from
customs duty.
As regards Central Excise duty, IT equipment attracts 10% excise duty, which is the mean CENVAT rate
attracted on most manufactured items. Since credit of input taxes is available, the actual incidence
on such equipment is lesser. Moreover, inter-sectoral credit is available for excise duties and service
tax, and thus, users can avail credit of taxes paid on equipment.
As regards service tax, exemption to small service providers is available across all taxable services,
including information technology software service, for annual turnover upto Rupees Ten lakhs; this
apart service tax exemption has been extended to packaged or canned software sold across the shelf
and intended for single use.