FM-speak on IT

102. IT is India’s showpiece success story. We have to not just maintain its momentum of growth, but continuously encourage it. Therefore, it is proposed that the concessions extended to IT under Sections 10A and 10B of the Income Tax Act will continue as originally envisaged. As per law such companies as are currently covered by these tax exemptions lose the benefits upon change in their ownership or shareholding. This is not logical. I am, therefore, removing these restrictions; the benefit of such tax exemptions will remain even in the case of amalgamation or demerger.

103. Another anomaly is levy of excise duty on pre-loaded software in the case of computers. As software is already exempt from excise duty, I see no reason why this benefit should be denied simply because it gets loaded in a computer. From now, the value of pre-loaded software will be excluded for the purpose of charging excise duty on computers.

104. Customs duty on specified electronic components for IT industry is being reduced in conformity with our WTO commitment.

105. In addition, Customs duty on a number of capital goods used by the telecom and IT sector for manufacture of components will be reduced from 25 percent to 15 percent. For optical fibre cables, used widely for networking to provide bandwidth to the IT community, the Customs duty is also being reduced from 25 percent to 20 percent. To help the domestic industry to manufacture e-glass roving used for making optical fibres, it is proposed to reduce the import duty on specified raw materials for the manufacture of e-glass roving from 30 percent to 15 percent.

106. Telecom and domestic satellite service companies enjoy the benefit of tax holiday. Since it takes quite some time for such projects to materialise, I propose to extend the deadline of setting up the units by one more year to March 31, 2004.

[From the text of the Union Budget 2003-04 speech]