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Highlights of Indian Budget for software Industry...

Highlights:

  • Tax exemption to on-site services
  • Tax exemption for M&As of IT firms in special zones
  • Sales to DTA by firms in STPs EPZs and FTZs to be taxed.
  • Five-year tax holiday for broadband and ISPs
  • Five-year tax holiday extended for new telecom companies
  • Dividend tax cut to 10% from 20%
  • Tax exemption on overseas foreign loans withdrawn
  • Govt to tax online information services
  • Profits from on-site software services exempt from tax
  • Tax exemption for STP and EPZ units
  • 10% surcharge on corporate tax scrapped
  • 1% calamity surcharge on companies to continue
  • 10% custom duty surcharge abolished
  • Service tax on online database retrieval services
  • Service tax on ISPs, paid email services
  • 100% tax exemption for tech education
  • Customs duty on select telecom, IT equipment down 15%
  • Custom duty surcharge abolished
  • Three SAD slabs of 8%, 16% and 24% streamlined to a single slab of 16%.
  • Automatic approval to lay off for firms with 1,000 staff Labour Retrenchment Policy relaxed
  • Govt to privatise VSNL
  • Passport offices, banks, licence offices, PSUs and insurance offices to be fully computerised by March 2002.
  • More IT-related courses to be offered in all the 43 RECs
  • Teledensity in the country increased to 3.5 per 100 by March 2001
  • Indian earnings in Esops can be used to invest abroad
  • Firms to be allowed to invest upto $50 m abroad
  • Divestment target pegged at Rs 12,000 cr
  • Privatisation of government firms to be speeded up
  • Convergence Bill will be introduced soon in an integrated manner
  • Automatic approval for FDI up to $50 m
  • Companies allowed to buy up to $100 m equity in foreign firms
  • Companies can invest all ADR/GDR proceeds abroad
  • FII ceiling hiked to 49%
  • RBI to set up electronic funds transfer system

Contd...

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