By Harichandan Arakali
BANGALORE, Jan 17 (Reuters) - India's $100 billion IT
outsourcing sector, which earns the bulk of its revenue from
exports of software services, won a long-sought and favourable
clarification over the tax treatment of some of the money it
Profits from software developed overseas by Indian companies
and from fees for sending staff abroad to client locations will
get the same exemptions that the industry gets at home under
Indian tax laws, the government said in a statement on Thursday.
"Overall, it's a positive move. It's a welcome measure that
clears the air and avoids future litigation," S.
Balasubramaniam, chief financial officer of Zensar Technologies
, an Indian outsourcer, told Reuters.
In one instance involving such taxes, No.2 outsourcer
Infosys Ltd is contesting tax claims of about 14
billion rupees ($256 million), including interest, related to
the fiscal years 2005-2008, the company said in a recent
quarterly filing with the U.S. Securities Exchange Commission.
Infosys said it was "delighted" with the clarification.
"It removes one big uncertainty for the industry," the
company said in a statement.
The National Association of Software and Services Companies,
or NASSCOM, an industry lobby, said the government's
clarification was a positive step.
"We urge that benefits denied in the past be reviewed in
light of this move and there be swift closure of cases for the
industry to benefit from this," NASSCOM said.
($1 = 54.7700 Indian rupees)
(Additional reporting by Manoj Kumar in New Delhi; Editing by
Tony Munroe and David Holmes)