Exempt IT from sales tax, says Ministry

MUMBAI, JANUARY 10: The Ministry of Information Technology is likely to ask state governments to exempt all IT products from sales tax. Sa...

MUMBAI, JANUARY 10: The Ministry of Information Technology is likely to ask state governments to exempt all IT products from sales tax. Sales tax in most states have gone up to a whopping 8 per cent following rationalisation as suggested by the Jyoti Basu committee.

Addressing the SIDBI-Stanford University seminar on "India Silicon Valley Partnership 2000" IT minister Pramod Mahajan said he would call a meeting of all state IT ministers later this month to discuss the issue. "A uniform policy for IT even at the state-level will be in place," he asserted.

Replying to a query on whether this would affect states’ finances adversely, he said the increase in sales tax had come from rationalisation. "Rather than settle for the minimum slab, states like Maharashtra and Karnataka have increased sales tax from 2 per cent to 8 per cent," Mahajan said, "This is clearly a roadblock in the name of rationalisation of sales tax". "Software can be downloaded from net today," Nasscom president Dewang Mehta said, pointingout it was absurd some states were taxing software products. He said Nassscom, which was advising many state governments in framing their IT policies, was also asking them to keep sales tax on IT products zero. IT products would include even hardware like PCs and printers.

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The seminar was attended by around 350 delegates comprising Indian and Silicon Valley venture capitalists, entrepreneurs and financiers. Some of the high profile Silicon Valley entrepreneurs at the event were Suhas Patil, Sabeer Bhatia, K B Chandrasekhar and Kanwal Rekhi. Rafiq Dossani, director of the Asia Pacific Research Centre, Stanford University, also made a presentation. The government is expected to sign a memorandum of understanding with Stanford University to aid "incubation" funding of startups later this month.

New norms for hardwar sector soon
MUMBAI: The controversial IT Task Force report containing the recommendations of hardware industry will be implemented in next the six months, Union Minister forInformation Technology Pramod Mahajan said on Monday. The report was opposed by finance ministry officials on the grounds that it would result in considerable revenue loss to the government. "In his forthcoming budget, the finance minister will try his level best to implement this (hardware report). I have requested the finance minister that a transparent and stable tax regime be announced for IT," he said.

Sinha is due to present the budget for 2000-01 (April-March) towards the end of February. Calling telecom the soul of IT, Mahajan said development of the hardware industry was of utmost importance and growth in software needed to be supported by hardware. The task force report includes recommendations from all hardware industry segments including telecom manufacturers.