Saturday, March 29, 2014: The Industrial Policy Resolution (IPR) by the government of Odisha has been under review by various industry organisations, as the draft is floated amongst them to add beneficial pointers. Following which, the Software Technology Parks of India (STPI) has asked the state government to again add the zero rated sales option under Odisha VAT. The Vat act is asked to be extended to IT, ITes, ESDM units to enable them as internationally fit, in the draft IPR.
The IT (information technology), ITes (IT enabled services) and ESDM (Electronic System Design and Manufacturing) sectors have been aggressively promoted by the Odisha government. According to a Business Standard report, the tax rate was charged zero on goods that were sold via inter-state trade, some exports out of India, or dealers trading under the Special Economic Zone (SEZ), software technology park (STP), electronic hardware technology park (EHTP) and export oriented units (EOUs). This tax rate was present earlier under section 18, of the state VAT policy. But in the 2008 amendment, these services were only restricted to capital goods (used directly for production).
The STPI said that the earlier provision aided IT and ITes units, in STP and SEZ to reduce their input capital, thus making them “cost competitive” in the global market.
In the same report, a note from STPI, Bhubaneswar said, “As the exporting unit does not attract VAT (output tax), there is no clarity about how these input taxes will be calculated and claimed for reimbursements. In this connection, it is widely felt that re-introduction of zero rated sales under section-18 of the VAT act, 2004 (pre-amended) allowing benefits to procure all types of capital good as per their authorized operations by the IT, ITes, ESDM units under EoU / STP / EHTP / SEZ as approved by Government of India and offering tax exemptions on revenue operating expenses would make the exporting units cost competitive in global market.”
The Odisha IT department has send the proposals and suggestions from STPI to Industrial Investment Promotion Corporation of Odisha Limited (IIPCOL) for incorporation in the revised IPR. Manas Panda, Director STPI Bhubaneswar in his letter to the state IT secretary wrote that STPI expects these to extended to IIPCOL as suggestions and proposed changes in IPR for promoting IT, ITes and ESDM sector of the state.
