Karnataka withdraws software sales tax, 12% luxury tax

The Karnataka Chief Minister SM Krishna chose BangaloreIT.COM, the five-day mega event, to announce the removal of the four percent sales tax imposed on software as of 1 April 2001. The Karnataka government has also removed the 12 percent luxury tax imposed on computer components that fall under the category of electronic components.

BangaloreIT.COM was inaugurated on 1 November.

The Karnataka Chief Minister said, "In the wake of international recognition to the city, state and country, and the ongoing global recession, it is not encouraging to impose tax on software and hardware. The IT industry is in the process of achieving growth inspite of the global slowdown and the government will assist them during this tough times."

SM Krishna also declared the commencement of a Special Hardware Park project, to be set up near the proposed international airport. The hardware park would fall under the Special Economic Processing Zone (SEPZ) to attract major hardware vendors to set up their manufacturing plants.

The IT Park in Hubli set up by the Karnataka government with an investment of Rs 30 crore was also declared ready for occupation by the Chief Minister. The earth stations in Hubli and Mangalore, set up by the STPI, were also ready to offer services. He also added that about 15,000 jobs are to be created for IT enabled services in Karnataka.

Despite cancellation of participation worth Rs 2 crore, BangaloreIT.COM sold more than 600 sq meters of space over last year. The final number of participants were in the range of 325 to 335, out of which foreign participants were about 70.

"The dotcom bust, global slowdown and the 11 September attack led to cancellation of a lot of participants and invited guests because of security reasons. Despite these hurdles, BangaloreIT.COM has significantly increased in terms of exhibition space, foreign participation and industry involvement," said the IT Secretary of Karnataka, Vivek

Kulkarni.

The event has included three new conferences to its existing five -- Software Engineering Conference, CEO Conclave and the Global buyer-seller meet. In his speech about IT.COM, Infosys Chairman and CEO Narayana Murthy said, "These are the times for action. We will be measured by our performance and not by our words. The fact that in this slowdown organizing an event will be a big risk and coming out successful will be certainly noticed, and that's what BangaloreIT.COM has done."

Microsoft Indian President Rajiv Nair listed four points that attracted Microsoft to participate in the BangaloreIT.COM event. "Political will to drive IT as a business in the state, a smart move to hold this event on the same date every year, the city's environment and taking consumer feedback on enhancing the show is what is driving Bangalore IT.COM to its success," he said.

Microsoft unveiled Windows XP on the inaugural day of BangaloreIT.COM for the South India market. The product is priced at Rs 6,950 and an upgrade version is available at Rs 4,300. As part of its promotional activity in BangaloreIT.COM, Microsoft is giving away an Intel Web camera worth Rs 2,500, along with Win XP.