Karnataka withdraws software sales tax, 12% luxury tax

The Karnataka government has removed the four per cent sales tax imposed on software as of April 1, 2001. It has also removed the 12 per cent luxury tax imposed on computer components that fell under the category of electronic components.

This was announced by the state Chief Minister, SM Krishna, during the inauguration of the five-day
BangaloreIT.COM.

The Chief Minister declared, "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."

He 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, with an investment of Rs 30 crore by the government, 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. "The government is encouraging young entrepreneurs to enhance this industry. In this endeavor, the government has set up incubation centers in 10 districts. The Hubli IT Park and the earth stations in Hubli and Mangalore would encourage these entrepreneurs to set up shop in these places," he added.

Krishna also emphasized on the investments being earmarked by various corporates for outsourcing IT enabled services from India, especially Karnataka.. About 15,000 jobs are to be created for IT enabled services in Karnataka, he said.