Relief for tech firms as govt sheathes tax sword
In mid-2012, many software giants including Wipro and Infosys had received I-T notices (aggregating about R600 crore) for claiming tax exemption on onshore services by declaring them software exports. The department's clarification comes at a time a tribunal decision on the dispute is awaited.
The seven clarifications issued by the CBDT in this regard are clearly in conformity with court judgments that in case of bona fide exports, “nature of services” could be liberally defined so as not to deny tax benefits (export incentives). Said Ernst & Young tax partner Rajiv Chug: “There are judicial precedents to the effect that as long as the export claims are certified by the designated authority (the directorate of STP), tax benefits can be given. This will help reduce litigation and is in sync with the judicial precedents on the issue.”
Apex software body Nasscom termed this clarification a “huge relief”.
Sangeeta Gupta, vice-president, Nasscom said: “It will ease the issues in the