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Internet and Mobile Association of India (IAMAI) has sent a memorandum of recommendations prior to the upcoming budget session to The Ministry of Finance and Department of Information Technology seeking sustainable growth for the digital industry.

Companies providing Mobile Value Added services (VAS) and Internet services on consolidated basis comprise of the whole Digital Industry in the country. This sector has asked for the inclusion of its suggestions in the upcoming budget from both the concerned authorities, regarding the growth of this industry. In its detailed memorandum, IAMAI has included three major issues along with the suggestions.

The first point includes preferential corporate tax treatment for the high technology internet and mobile VAS sectors seeking fiscal and tax benefits to achieve its full potential. For this point the association’s recommendation is like this: It is our recommendation that content and service providers on internet and mobile; transactions on internet and mobile and companies providing internet and broadband connectivity be exempt from Income Tax for 10 years under section 35 (A) of Income Tax Act with a very strict sunset clause.

In the second issue, IAMAI has sought fiscal benefits for E-Commerce referring to the Chapter 5 of the TRAI Recommendations for E-commerce. In its suggestion the association has urged that, The Government of India should also recommend to all State Governments to waive sales tax on goods and services that are transacted through electronic mode (e-commerce) for the next 5 years up to limits to be prescribed by the Government. This recommendation should be then followed with legislation to ensure execution by the State Governments.

And finally in the third demand is regarding the 5 year Moratorium on Service Tax for growth of Internet Services. In its recommendation IAMAI has said, Moratorium for a 5 year period on service tax under section 65 (72) [zh], this will allow this nascent industry to grow in size and stabilize and be in a position to accept additional tax responsibilities.

In a prepared statement Dr Subho Ray, president, IAMAI said "everyone recognises that the digital industry is capable of delivering huge positive externalities, especially for rural areas, it is time that the industry was incentivised to do so"