Published on August 18, 2009
Reviving Crystal IT Park Indore
What? Crystal IT Park with 2 constructed buildings with built up area of 5.5 lakh sq ft and about 16 acres of vacant land for a total consideration of Rs 100 crores (payable in 3 years) Another building of 5.5 lakh sq ft needed
Why? For IT and diamond processing companies to become eligible for tax exemptions for next 10 years It is within city limits Available at a very attractive cost
Is there a real need? and hence a real business opportunity?
Are we sure that March 2011 is the end of tax exemption of STPI units? 2009 was the deadline, it got extended in last 2 budgets for 1 year each – this demonstrates that the government is not willing to extend it for multiple years. If you read the words FM said – to let IT industry tide over current economic slowdown the sunset clause is extended another year till 2011. That says it all, this extension should be end of it
Are we sure that March 2011 is the end of tax exemption of STPI units? Hike in MAT from 10 to 15% - which effectively becomes 17% post surcharges, this means that the intention is very clear. Government already started collecting tax from Apr 2009 onwards when it included STPI units under MAT ambit Government is losing as much as 15000 Crores, because of STPI exemptions Industry leaders like Narayana Murthy are against extending any such tax exemptions
Assuming the exemptions are given for SME sector, will they need SEZ? Even in least likely case of STPI extension for SME sector, it will not continue for 10 years
MAT MAT is applicable to STPI units. Tax outgo is certainly there, it cannot be avoided Even though it is a credit, it is money gone which will never be recovered. We can get its credit only if the tax liability is more than the applicable MAT in future years. Remember it is Minimum Alternate Tax – Government wants to recover as much as possible
Budget - 2010 Most of the SMEs will want to wait for next year’s budget to see if there is any more extension The likelihood of any extension is zero, There is a already 2 extension made Each year MAT has been slapped to recover the tax lost due to STPI exemptions 10% last year Increased to 15% this year
Budget - 2010 No change in government since this is quite a stable one No change in finance minister IT Industry is quite stable and has grown many folds in 11 years of exemptions Government wants to minimize the ever increasing fiscal deficit
How? Form a consortium which will be positioned as one committed big buyer to a potential co-developer in the project Any co-developer will find a pre-purchase promise quite attractive In return the consortium can negotiate a better deal for the space it needs
When? Acquisition should be done by the end of 2009 Finishing to be done in next 6 months By December 2010 offices should start operating from the premises
Why us? To meet our own needs To highlight Indore as preferred IT destination in Central India We can’t wait for government to come up with a solution, we solve it for the government
Let us finish it!
And turn dream into reality!
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