The revenue department has created needless uncertainty on the tax liability of foreign parents and principals of business entities in India, by suddenly withdrawing a 40-year old circular. It needs to bring out another circular at the earliest, clarifying that its intention is not to endanger India’s thriving outsourcing industry, particularly the captive units which generate about 35% of the sector’s revenue.

The Income Tax Act requires foreign companies to include in their income taxable in India any income arising from or through its business connection in India.

There are no clear-cut rules to define a business connection. The circular that has now been withdrawn had been successfully interpreted, to the chagrin of the tax department, to put the income generated for a foreign company by a business process outsourcing unit in India outside the ambit of taxation in India.

The only condition was that the foreign client should fully compensate the Indian BPO for its services, something that is not readily guaranteed if the Indian BPO is a subsidiary of the foreign client.  Full news

To lure the business process outsourcing and IT/ITeS industry, the Mayawati government in Uttar Pradesh has showered various sops. The realty sector, too, has been blessed with many relaxations.

IT majors and BPOs setting up units in UP will get 100 per cent relaxation in stamp duty. Those setting up call centres can now get a land lot in UP on easier terms.

In a meeting of the state cabinet chaired by the CM on Friday, all development authorities in the state have been directed accordingly. IT companies have been given huge relaxations in the lease rent on land allotted to them. IT and BPO industries can now complete construction on the land allotted to them in five years instead of three years.

The government has decided to reduce the lease rent on commercial land by more than 60 per cent. The cabinet also decided that those getting a commercial plot through open bidding by March 31, 2010, will have to pay just one per cent lease rent instead of the earlier rate of 2.5 per cent. (more…)

Three persons were arrested from the city after a Business Process Outsourcing (BPO) company in Vastrapur lodged a complaint against them, accusing them of data theft. The stolen data, said police, was extremely valuable. Vastrapur police station officials have booked the trio for theft and breach of trust.

According to police officials, the BPO authorities lodged a complaint against two employees, Sheral Thakar, working with the networking department of the company, and Rahul Zatakiya, working with web development department, along with Abhijit Ghosle, a former employee of the company on Friday for the theft of data from the company database.

The theft was going on for almost three months in which, according to officials, the company lost thousands of virtual datasheets. As per ongoing rate, a complete database fetches US $ 5 to $ 6 in international market. The officials maintained that the theft has not yet resulted into financial loss but virtual loss is inevitable. (more…)