Government should frame tax-friendly SEZ policy: Nasscom

Recommending measures to be taken for the IT industry in the upcoming general budget, IT industry's apex body Nasscom said that the government should frame a tax-friendly policy for Special Economic Zones (SEZ) for a period of 20 years.

"Establishing a tax-friendly Special Economic Zone policy for the next 20 years would help retain existing tax benefits as well as continue to generate employment while increasing foreign exchange earnings," it said in a statement.

The IT body also said that measures should be taken to promote the creation of intellectual property in engineering, research and development (ER&D) by incentivising investments in centres of global multi-national companies in India and nurturing 1,000 technology spin-offs from the ER&D centres in India.

"While there has been a continued focus on encouraging IT adoption and allocation of funds across sectors like an Innovation fund for secondary education, currently there are no specific incentives for R&D for IT companies," it said.

Nasscom also recommended a Rs 500 crore allocation in the budget for the financial year 2019-2020 to co-fund talent development and re-skilling in IT services.

"With a requirement to reskill 40 per cent of the country's 4 million (40 lakh) strong IT workforce to cope with emerging technologies, it is recommended to incentivise firms by promoting expenditure on developing skills and training programs undertaken by the industry."

It also urged the government to encourage innovation among start-ups and enterprises by exempting tax on long term capital gains from the sale of shares in unlisted companies.

Investors who invest in eligible start-ups with an intention of value accretion should be benefitted with tax deductions, on the lines of Singapore and the United Kingdom, it said.

It also suggested that start-ups and small and medium enterprises with a turnover of less than Rs 50 crores also be exempted from minimum alternate tax (MAT).