The government on Tuesday said there were apprehensions in the BPO industry about a CBDT (Central Board of Direct Taxes) circular taxing foreign companies outsourcing 'core' activities from India while exempting the 'ancillary' activities, and assured that it was looking into the matter.
"That problem is anticipated. It has not actually happened. But it is an apprehension which is sought to be addressed. In operation that problem has not really come," K K Jaswal, IT secretary, said on the sidelines of a function.
There is an apprehension in the industry on the language of the circular (of CBDT) which leaves certain 'amibiguity.'
That needs to be corrected, he said and added. "It is premature to say anything in detail about the steps we will take. But we have articulated that to those concerns and we are at it."
In a circular in January this year, the CBDT issued a circular saying in the case of BPO entities undertaking core activities as software development and maintenance, debt collection service, investment consultancy and travel agent services for the principal foreign companies, will have to pay income tax.
Jaswal said the move by the government to correct the anomaly in the PC segment would help in meeting the purpose of the Budget announcements.
"We are happy that the intent behind measures which were announced in the Budget has now been operationalised. At that time it was not possible to operationlise it because the Modvat overflow problem had not been taken care of. This has been taken care of now," he said.
Government on Monday announced additional duty of 7 per cent on fully imported PCs and 6per cent on stand-alone CPUs, correcting the anomaly of having 16 per cent duty on peripherals and zero duty on imported PCs.