Andhra likely to tax IT exports

The Andhra Pradesh government is planning to bring into the sales tax net from next year the booming IT sector exports from the state.

Disclosing this here today, Konatala Ramakrishna, minister for commercial taxes, said deliberations in this regard were under way in the government, alongside discussions with IT companies.

Responding to a question, he said various modalities were being worked out on taxing the revenues earned by IT companies. Several players in the industry had responded positively to the tax proposal, he added.

It is learnt that the government is considering the lowest VAT rate of 4 per cent for IT business. Ranked fourth in IT exports in the country, Andhra Pradesh has witnessed fast growth in the sector in recent years.

While the total IT exports from the state in 2005-06 were worth about Rs 12,500 crore (Rs 125 billion), year-on-year growth of 51 per cent, 2004-05 saw about 64.5 per cent growth.

The sector contributed 45 per cent of the total exports, worth Rs 19,552 crore (Rs 195.52 billion), from the state in 2005-06.

The proposal to tax IT business comes in the wake of the government's thrust on resource mobilisation to meet budget expenditure, which is in spate.

Besides its efforts to tap the existing sources of revenue, the government has converted land into a major source of revenue through various means.

Recently, the state Cabinet proposed to bring in an ordinance enabling the government to take over assigned lands no more in the possession of assignees.