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IAMAI seeks tax sops for internet cos, preferential treatment for venture investors

Indian internet industry body has sought tax holiday, deductions for salary and research expenses by firms and preferential tax treatment of early stage investors to support the growth of companies in the digital domain.

The Internet and Mobile Association of India (IAMAI) has pressed for a four-point agenda to boost growth prospects in the nascent but fast growing industry.

Although Prime Minister Narendra Modi has already indicated his plans for a ‘Digital India’ initiative, IAMAI is of the opinion that some specific measures in the upcoming Union Budget would go a long way in fueling growth for the firm in the sector.

In particular it has asked for tax holiday to promote large internet companies from India. IAMAI has recommended that digital companies be given tax holidays on the lines of concessions provided to ITeS and software industry. The association is pressing for sops like the one provided to the telecom sector where a tax holiday was given for a period of ten years in a block of fifteen years.

IAMAI has also sought measures to boost employment in the sector by pitching for deductions for salaries paid to the newly hired, that too without any threshold for availing it.

This could be on the similar lines of an existing provision where Section 80JJAA of the IT Act provides that an Indian company operating an industrial undertaking be allowed a deduction of an amount equal to 30 per cent of additional wages paid to the new regular employee during a year for three years, including the year in which such employment is provided.

The internet industry body has sought a deduction of an amount equal to 150 per cent of salary paid to new employees be allowed to companies operating in the digital industry without any minimum employment threshold limit to claim the incentive.

IAMAI has also called for preferential tax treatment for angel and other early-stage venture investors as they comprise the main source of funding for new ventures.

It has also sought an incentive of a weighted deduction of 200 per cent of amount spent on research and development of content in local languages to increase the penetration of digital industry in rural areas.

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