Sinha chips in more bonanza for IT sector

The finance minister also announced the government’s decision to advance by two years to 2003 the commitments under the information technology agreement (ITA) under the WTO to bring tariffs on the information technology products to zero level.

The package of incentives for the IT sector was announced by the finance minister in pursuance of the recommendations of the national task force on information technology and software developmentheaded by deputy chairman of Planning Commission Jaswant Singh.

The finance minister also proposed depreciation of IT products at the rate of 60 per cent looking into high rate of obsolescence of such products. He said that there would be no gift tax on gift of computers and the benefits of section 80 HHE would be extended to supporting developers of the computer software.

The minister further said the computers and computer peripherals imported under 100 per cent EOU/EPZ/STP/EHTP schemes when donated to recognised educational institutions, government organisations and registered charitable hospitals after use for a period of 2 years from the date of import, would be exempt from the levy of customs duty.

The minister explained that widening of the definition of software under under section 80 HHE of Income Tax Act would enable the IT sector to avail of the benefits of 100 per cent deduction on their export earnings.

Sinha also said that the withholding tax on royalty payable in respect of transmissionof IT data would also be exempted.

Referring to indirect taxes, the minister said he had announced a number of duty concessions on various IT products such as floppy disk drives, hard disk drives and CD-ROM drives, ICs of value exceeding Rs 1000 per piece, cathode ray tubes and deflection components for colour monitors for computers in order to give a boost to the spread of information technology.

He had also reduced the basic custom duty on telecom software from 40 per cent to 30 per cent and completely exempted all software from the levy of excise duty. Stating that computer software was already fully exempt from both customs and excise duties, Sinha said that, "in order to further speed up the spread of information technology, I propose to exempt all software used in IT sector from customs duty."