Nasscom sees 1 bn VCF inflows

The focus of the visit would envisage more opportunities for Indo-Japan alliances in the IT sector and Japanese businesses were keen to follow the model of competitive advantage derived by the US business community through outsourcing software work to India, Mehta said.

The interaction is also looking at resolving some of the procedural obstacles in establishing Indo-Japan alliances including the removal of withholding-tax related to the definition of the term Fees for Technical Services8217; under the Double Taxation Avoidance Treaty DTAT between India and Japan.

quot;While the India-Japan software business is now on a good take-off stage, there is an issue with regard to the deduction of a 20 per cent withholding tax by Japanese authorities on payments made to Indian software companies for supply of customised software solutions,quot; Mehta said, adding: quot;While the problem was mostly with on-site services, offshore development in certain cases were also not being spared.quot;

According to Nasscom, the withholding tax is not applicable to Indian software companies that provide software development services either through off-shore or on-site services as it amounts to sale of customised products or solutions with proprietary rights.

quot;Such considerations received do not fall under the category of the fees for technical services8217; treaty and, moreover, in the case of off-shore software development, there should not be even an iota of doubt,quot; Mehta said. A case in point is a similar treaty signed between India and USA wherein US tax authorities do not deduct tax at source for similar customised software development services.

The agenda will also include discussions on allowing Indian software professionals travelling to Japan to get multiple entry visas to enable timely travel and attend to project specifications, maintenance and support services.

quot;Inspite of the issues needed to be resolved, Nasscom, is looking at this visit as an opening up of the Indo-Japan software trade channels and will be an integral part of the efforts made by the Japanese prime minister in helping to bridge the digital divide in the global comunity,quot; Mehta said.

Ninjas on the anvil

MUMBAI: Nasscom is all set to launch its mega initiative christened 8212; NINJAS Nasscom8217;s India-Japan Alliances in Software 8212; on Tuesday with a view to open up opportunities for Indo-Japan trade in software, according to its president, Dewang Mehta. Under the initiative, Nasscom is looking at creating an interactive platform for the Indian software companies to explore business opportunities with Japan. While a series of seminars and meetings would be organised in favour of the initiative, Nasscom had agreed to train 5000 IT professionals in Japanese within the next two years, Mehta said.