By Pinky Shah, Sonalee Godbole, Chartered Accountants
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Exemption would be available u/s. 10A, 10AA and 10B (as applicable) vis-à-vis software business in following scenario:
• Software developed abroad at a client’s place amounting to ‘deemed export’, so long as there exists a direct and intimate nexus or connection of development of software done abroad with the eligible units set up in India pursuant to a contract between the client and the eligible unit.
• Profits earned from deployment of technical manpower at the client’s place abroad specifically for software development work pursuant to a contract between the client and the eligible unit provided such deputation of manpower is for the development of such software and all the prescribed conditions are fulfilled.
• In case of each Statement of Works which is a part of a Master Service Agreement.
• Research and Development activities pertaining to software development would be covered under the definition of ‘Computer Software’.
• In case of a slump sale, the tax holiday can be availed of for the unexpired period at the rates as applicable for the remaining years, subject to fulfilment of prescribed conditions.
• Separate books of account need not be maintained for each eligible unit. However, the assessee should be able to produce the required details called for by the AO.
• When an eligible SEZ unit relocates physically to another SEZ in accordance with the prescribed rules, tax holiday would be available for the unexpired period at the rates applicable to such years.
• Exemption would be available to a freshly set up unit, as long as it is set-up after obtaining necessary approvals from the competent authorities; has not been formed by splitting or reconstruction of an existing business; and fulfils all other conditions prescribed in the relevant provisions of law.
