Karnataka government doles out sops to IT industry

BANGALORE: The Karnataka government on Monday dolled out a series of incentives for the information technology industry, which included the creation of an independent IT department in the state and exemption of sales and entry taxes.

State chief minister S.M. Krishna announced the sops to the industry while launching BangaloreIT.com '99, which began here on Monday. The five-day mega event is expected to attract 40,000 business and five lakh general visitors.

The chief minister announced total exemption of sales tax for all IT industry sectors, including manufacturing and trading. Submission of particulars in Form C for claiming CST benefits has also been discontinued. All IT products within a transaction limit of Rs 50,000, sold during the BangaloreIT.com '99 has been exempted from sales tax.

The state has announced exemption of stamp duty for companies that set up IT units in the Electronic City in Bangalore. Companies will no longer have to pay the Pollution Control fee on the total capital investment. The fee related to clearance of Pollution Control Laws will only be on the basis of investment in captive power generation sets and other equipment causing pollution. The consent will be valid for five years, the chief minister said.

Mr Krishna also announced the creation of a special taskforce to explore the possibility of exemption of sales tax on all e-commerce transactions for a period of three years with some ceiling. He also removed entry tax on computer hardware, peripherals, accessories and raw materials and other inputs used in the IT industry.

The IT industry in the state has been exempted from payment of work contract tax on annual maintenance cotracts of IT products and equipment. Mr Krishna said that the government would set up Cyber Parks in Mysore, Hubli and Mangalore to help small entrepreneurs. These parks will act as incubation units and provide the latest state of the art infrastructure and communication facilities to new entrepreneurs.

Mr Krishna announced that the new IT department will function as a single-window for all clearances, incentives, permissions that would be required by the IT industry. The department will have under it the Karnatka Government Computer Centre, Indian Institute of Information Technology, Karnataka Remote Sensing Centre and Karnataka State Electronics Development Corporation.

Mr Krishna said that the basic objectives of the new department would be to promote e-governance in the state, to establish communication backbone reaching down to Taluk and Panchayat headquarters, take IT to the rural areas, ensure continued flow of IT investments in the state, create new hi-tech centres and prepare an overall comprehensive IT vision for the state in the new century.

A task force on IT headed by Infosys chairman N.R. Narayana Murthy, will be set up. The state government, in partnership with IBM, will set up a scool for Internet studies, which will be an exclusive institution and the first of its kind in the country, Mr Krishna said.

The chief minister announced that the state government has tied up with Carnegie Mellon University, along with Indian Institute of Science and LG Soft, India, to open a CMM Certification Institute by February 2000.

A convention centre will be built in collaboration with the private sector and 35 acres of land has been allocated next to the Electronic City for the purpose. Mr Krishna said that the government would advocate a plan to encourage international airlines to operate direct international flights to USA and Europe from Bangalore airport.

The chief minister said that within a month, video conferencing facility would be made available to all deputy commissioners and superintendent of police and chief executive officers of Zilla Parishads in all districts of the state. He also announce that every high school in the state will be assisted in having a computer laboratory with Internet connectivity. This project will be undertaken in association with the private sector.