In a move that will significantly ease the tax burden on India's biggest information technology companies, the government has decided
to amend the law relating to tax exemption for units operating out of special economic zones (SEZs).
SEZs set up by IT majors like Infosys, Wipro and Tata Consultancy Services (TCS) under the parent companies will soon be able to enjoy 100% tax exemption on profits on a par with those set up as separate entities.
Prime Minister Manmohan Singh, who is also handling the finance ministry, has agreed to change the relevant norms under the Income Tax Act, a commerce department official has said. The finance ministry will soon issue a notification changing rules under Section 10AA (7) of the Income Tax Act, which will allow all SEZ units to be treated as separate entities and thus be eligible for 100% tax exemption on profits for the first five years of operation.
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