Following is the text of the Statement made by the Chairperson, CBDT to the media here today:
“The Indian Software Industry has been the beneficiary of direct tax incentives under the provisions like Sections 10A, 10AA & 10B of the Income -tax Act, 1961 in respect of their profits derived from the export of computer software. These provisions prescribe incentives to “units” or “undertakings”, established under different schemes, which are/were deriving profits from export of computer software subject to fulfilling the prescribed conditions.
It was represented by the software companies that several issues arising from the above mentioned provisions are giving rise to disputes between them and the Income-tax Authorities leading to denial of tax benefits and consequent litigation and, therefore, required clarification. In order to address various issues in this regard, the Government had constituted a Committee under the Chairmanship of Mr. N. Rangachary, former Chairman CBDT and IRDA, which was formally notified on 03.08.2012. The Committee, while examining these issues interacted with various Departments of Central Government, industry stakeholders and accounting firms.
The First Report of the Committee was submitted on 14.09.2012 to the Finance Minister and pertained to ‘Taxation of Development Centre and IT Sector’. The report, inter alia,discussed various Direct Tax issues pertaining to the computer software industry, which are eligible for Direct Tax benefits under sections 10A, 10AA and 10B.These wereexaminedinCBDT and the following clarifications are hereby issued -
The recommendations of the Committee in its first report, pertaining to other issues concerning Development Centres and its subsequent two reports on Safe Harbour provisions for IT and ITES sector and Safe Harbour issues for outbound loans and corporate guarantee are under examination.”