Tax holiday norms for software tech parks to be eased

The government is likely to delink change in shareholding pattern of software units in STPs from the benefit of the graded tax holdiay available upto 2010, under the new section 10A of the Income-Tax Act.

The amended Finance Bill, 2000 had introduced  two new sections 10A and 10 B of the IT Act in place of old section 10A and 10B, which provided a 10 year tax holiday for units set up in STPs/EPZs and EOUs.

Section 10A now provides that tax exemption shall not be available in respect of a STP unit, if 51 per cent of the shares of the company on the last day of the year is not held by the same people who held it on the last day of the year in which the unit was set up.

Under the old provisions, however, STP units set up before April 01, 2000 were entitled to tax exemption on their profit for 10 years irrespective of any change in the shareholding pattern of the company.

IT industry sources said that the new section will pose hurdles in the re-organisation of business. Linking shareholding patterns with tax exemption would adversely affect the units set up with the help of venture capital, if the VC company exits.

IT Act comes into effect 

The information technology Act came into effect on 18.10.2000 with the government notifying the Act and appointing the Controller of Certifying authority to supervise the authorisation of digital signatures.

Government has decided to appoint Executive Director of the Centre for Development of Telecomatics (C-DOT) Kailash Nath Gupta as the Controller of the Authority.

The notification would enable implementation of IT Act with immediate effect.  India would be the second after Singapore in Asia to implement a law for electronic commerce and among the handful of countries globally.


Consequent to the various measures taken by RBI for improving the existing flow of credit to the SSI sector, SIDBI introduced a new refinance product, viz., Financial support (Short-Term Loan) to Banks during the year 1998-99. Under the scheme, assistance is provided to SCBs and co-operative banks in respect of their outstanding portfolio relating to SSI sector, against which no financial support (including refinance assistance from SIDBI) has been availed of from any other institution.