Hyderabad, June 27: The 500-odd small and medium-size (SME) IT and ITES companies in the state are currently under siege. While companies are pinning hopes on the proposed IT Policy 2010-15, various government departments seem to be ironing out issues so as to include the incentives requested by the industry, particularly, sops relating to reduced rentals in upcoming SEZs.
The sunset clause under Section 10A and 10B of the Income Tax Act will expire in March 2011.
With the tax benefits coming to an end, the industry feels that there will be no level-playing field between small and large companies, which are moving into SEZs. For SMEs, SEZs will prove to be expensive due to high rentals.
“With uncertainity looming large on the extension of tax holiday under the Software Technology Parks of India (STPI) scheme, the cost of operations for SMEs with less than Rs 50 crore annual turnover, is proving to be a challenge. We’ve suggested that they be given space in SEZs at subsidized cost,” L Suresh, president, Information Technology & Services Industry Association of AP (ITsAP) told Express.
He added that the government has agreed to provide space at subsidized rentals in existing SEZs. However, what needs clarity is if it applies for both public and private SEZs.
Government sources said, that the Department of IT & Communications, is coordinating with other departments to facilitate space at reduced rates in SEZs besides creating separate facilities for SMEs within SEZs.
SMEs contribute over 21 per cent of the total IT & ITES revenues and 33.6 per cent employment in the state. While government has agreed to provide space at subsidized rentals in existing SEZs.
Meanwhile, to promote SMEs, the industry association also sought allocation of 10 per cent government business to SMEs. Other recommendations of ITsAP include, resolving the double-taxation issue including VAT & Service Tax.
“The Chief Minister was responsive to our suggestions and we are hopefull that these issues would be addressed at the earliest,” said Suresh
—Agencies