The apex body of Indian IT/ITes industry Nasscom has demanded for a 5-10 year extension of the tax holiday that is due to end next year. It has also articulated its desire for the extension of STPI scheme,removal of FBT (Fringe Benefit Tax), certain clarification on service tax. Rationalization of direct taxes is also on Nasscoms Budget wish list.

Speaking at Nasscoms BPO Strategy Summit 2009 here on Tuesday, the organizations president Som Mittal said the industry has started showing signs of recovery, but that the challenge continues. Government support through extension of the fiscal benefits under Section 10A/10B to mitigate the impact of the recession and protectionist measures being adopted globally is very necessary.

This is particularly important for SMEs as it will facilitate their continued growth, provide parity with incentives under the SEZ scheme and encourage industry to move into Tier 2/3 cities, he said.

Pramod Bhasin, president of Genpact and chairman of Nasscom, said the government sector will throw up large business deals for companies. Seeing the opportunities in government, telecom and insurance sectors, service providers are increasingly focusing on the domestic market. Companies have to create new operating and business models to tap into the domestic opportunity. This is a huge market, said Bhasin.