Picked from The Economic Times.
Government may extend income tax holidays to small and marginal IT companies beyond 2009, IT and Communications Minister A Raja said on Thursday.
Exemption from paying income tax for IT companies is to end in 2009.
"I have met Prime Minister (on the issue). PM is inclined to give some relief.... We are of the view that small and marginal enterprises should not suffer. The matter is under consideration," he told the Rajya Sabha during the Question Hour.
Raja said he had also met Finance Minister P Chidambaram on extending tax break for another 10 years but the "Finance Minister had some reservations."
The extended tax breaks should not go to big and flourishing companies who have already utilised the previous tax breaks, he said, but did not specify when a decision would be taken.
The Minister said the slowdown in the US economy has so far not had any overall significant direct impact on the growth of the Indian IT-BPO sector. However, the share depreciation of the US dollar over the past year has added significant margin pressure on the IT industry.
Raja said industry body NASSCOM does not have any information on reduction in salaries in IT industry but there had been indications that the annual increments to employees may be slightly lower.
The National Association of Software and Services Companies (NASSCOM) has indicated that the data on salary cuts if any would be available only after the analysis of the annual results to be announced by the companies.
Thursday, April 24, 2008
Tuesday, April 15, 2008
Employers must quote PAN in TDS returns
Picked from The Econonic Times.
Employers will have to quote the Permanent Account Number of their employees while submitting TDS (tax deducted at source) returns to the government as tax refund has become difficult without PAN after annexure-less forms were introduced. Income Tax department would not accept these returns if employers fail to quote PAN in at least 95 per cent cases of salaried employees and 85 per cent cases of non-salaried staff. Employers who do not comply with the rules would be treated as non-filers and could face penal consequences, an official release said on Tuesday. Quoting PAN is important because the IT department has prescribed new return forms without attachments from assessment year 2007-08. Tax refunds can only be given to the employees on the basis of information made available by employers through TDS returns, the statement said.
Employers will have to quote the Permanent Account Number of their employees while submitting TDS (tax deducted at source) returns to the government as tax refund has become difficult without PAN after annexure-less forms were introduced. Income Tax department would not accept these returns if employers fail to quote PAN in at least 95 per cent cases of salaried employees and 85 per cent cases of non-salaried staff. Employers who do not comply with the rules would be treated as non-filers and could face penal consequences, an official release said on Tuesday. Quoting PAN is important because the IT department has prescribed new return forms without attachments from assessment year 2007-08. Tax refunds can only be given to the employees on the basis of information made available by employers through TDS returns, the statement said.
Thursday, April 3, 2008
IT Dept asks Microsoft to pay Rs. 700 cr tax
Picked from The Economic Times.
Software giant Microsoft has to pay about Rs 700 crore as income tax, including interest on royalty income generated from sale of software in India. The Comission of Income Tax Appeals, which is hearing a case filed by the IT department, has held that price charged for use of Microsoft's software in India is royalty and tax is payable on it. It has determined that the royalty income is Rs 2,240 crore for the six years to 2005 (1999-2005) and not Rs 868 crore as originally assessed. Accordingly, official sources said, Microsoft's estimated tax liability on royalty stands at Rs 700 crore, including interest. Reacting to the decision, Microsoft spokesperson in India said, "The case is an old issue relating to financial year 1999 to 2004 and for an overseas Microsoft entity. Microsoft believes that it is in full compliance with Indian tax laws and the income tax treaty agreement between India and the US." Since it is an appellate order, Microsoft is reviewing the order and will determine the course of action accordingly, the spokesperson added. The sources said the CIT(A), handling international taxation cases in Delhi, held that the Gracemac Corporation, a 100 per cent subsidiary of Microsoft is liable to pay income tax on its gross royalty income earned out of licensing of softwares to Indian customers. The total gross royalty income for the six assessment years starting from 1999 to 2005 is computed to be about Rs 2,240 crore. Going by 15 per cent tax on royalty, the total tax liability on the Microsoft subsidiary is calculated to be about Rs 350 crore. With addition of interest, the total liability is likely to be Rs 700 crore, they added.
Software giant Microsoft has to pay about Rs 700 crore as income tax, including interest on royalty income generated from sale of software in India. The Comission of Income Tax Appeals, which is hearing a case filed by the IT department, has held that price charged for use of Microsoft's software in India is royalty and tax is payable on it. It has determined that the royalty income is Rs 2,240 crore for the six years to 2005 (1999-2005) and not Rs 868 crore as originally assessed. Accordingly, official sources said, Microsoft's estimated tax liability on royalty stands at Rs 700 crore, including interest. Reacting to the decision, Microsoft spokesperson in India said, "The case is an old issue relating to financial year 1999 to 2004 and for an overseas Microsoft entity. Microsoft believes that it is in full compliance with Indian tax laws and the income tax treaty agreement between India and the US." Since it is an appellate order, Microsoft is reviewing the order and will determine the course of action accordingly, the spokesperson added. The sources said the CIT(A), handling international taxation cases in Delhi, held that the Gracemac Corporation, a 100 per cent subsidiary of Microsoft is liable to pay income tax on its gross royalty income earned out of licensing of softwares to Indian customers. The total gross royalty income for the six assessment years starting from 1999 to 2005 is computed to be about Rs 2,240 crore. Going by 15 per cent tax on royalty, the total tax liability on the Microsoft subsidiary is calculated to be about Rs 350 crore. With addition of interest, the total liability is likely to be Rs 700 crore, they added.
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