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IT & ITES POLICY, 2003
Government Resolution No. ITP-2003/CR-3311/IND-7, |
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INDUSTRIAL ENERGY AND LABOUR DEPARTMENT,
Mantralaya, Mumbai – 400 032.
12th July 2003 |
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1. |
CONTEXT : |
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Government of Maharashtra has been supporting development of industry and business through a series of far-reaching policy initiatives. The Information Technology industry has been an important thrust area and has been receiving government support. During the last five years, the Government focussed on HRD, IT related infrastructure, fiscal incentives to IT units, IT in Governance and Institutional Framework for the IT sector. These initiatives have enabled the IT industry in the State to establish an initial lead and a firm foundation for a quantum leap has been laid. Exports of software and ITES from the State presently account for about 20% share of the country's exports. These exports have registered an annual growth of more than 30% during the last four years. The whole State has been connected through an Optical Fibre Cable Network and a statewide network of competent training institutions has been established for building a pool of world-class IT professionals for providing strength and support to the IT industry in the State.
At this stage of growth of the IT industry in the State, new areas warranting State's policy support have surfaced. The State Government has identified and appreciated these emerging needs, requiring State support for facilitating growth of the diversified streams of the IT industry in the near future. Through a consultative process involving prominent stakeholders of the IT industry, the Government has firmed up areas for further State support. Such a focussed support to different segments of the IT industry is to be implemented under the IT & ITES Policy, 2003. |
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2. |
OBJECTIVE : |
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The main objective of the IT and ITES Policy, 2003 is to make
Maharashtra the most favoured destination for investments in the IT and ITES industry. This is intended to be achieved by directing the State support at opening up large scale opportunities of employment and selfemployment, facilitating growth of skilled and globally employable man-power, unprecedented spurt in exports, creating hassle-free and industry-friendly, 24 x 7 x 365 working environment, associating urban local Governments as responsive key stakeholders in promoting business and enterprise in the IT industry, and providing a legal framework for data protection and consumer privacy. |
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3. |
RESOLUTION : |
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The Government of Maharashtra is pleased to announce its Information Technology and Information Technology Enabled Services Policy, 2003 as detailed below. This Policy has come into force from 4th June, 2003 and will remain in force for a period of five years. |
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4. |
EXTRA ORDINARY FEATURES OF THE POLICY : |
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For achieving the objective of the Policy, the State Government commits itself to the following: |
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| 4.1 |
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Institutional framework for policy implementation: |
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An Empowered Committee headed by the Chief Secretary to guide and supervise implementation of the IT and ITES Policy, 2003 and take appropriate decisions. |
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| 4.2 |
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Unique Info Infrastructure: |
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| (a) |
Promotion of public IT Parks. |
| (b) |
Promotion of private IT Parks. |
| (c) |
Cost effective and fully reliable telecom connectivity to the IT & ITES units all over the State. |
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Excellent road connectivity from main Highways to IT Parks. |
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Permission to developers of IT Parks to invest funds to construct connecting roads from highways to IT Parks. |
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Leveraging the unique advantage of low cost overseas connectivity. |
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Ensuring reliable and quality power supply round the clock in IT Parks by permitting unlimited back up power, Captive Power Generation and status as Independent Power
Producers. |
| (h) |
Levying of power charges on IT and ITES units at industrial rates and notifying IT and ITES units as a separate category of consumers through MERC. |
| (i) |
Exemption of IT & ITES units from statutory power cuts in power supply. |
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| 4.3 |
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Developing a pool of skilled globally employable manpower: |
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| (a) |
Ensuring ready availability of skilled manpower certified by Maharashtra Knowledge Corporation and other training institutions/companies. |
| (b) |
Designing specific courses for English speaking, appropriate accent and communication skills and conducting training by School Education and Higher & Technical Education Departments. |
| (b) |
Making available infrastructural facilities of schools of Municipal Councils, Municipal Corporations and Zilla Parishads to IT and ITES Companies for conducting training programmes in ITES related subjects and English language skills. |
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| 4.4 |
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Industry-friendly and supportive environment: |
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| (a) |
Creating a progressive and supportive environment for 24 x 7 x 365 days working. |
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Relaxations under Shops & Establishments Act for working hours, work shifts and employment of women. |
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Applicability of all relaxations under the Industrial Disputes Act and Contract Labour Act to all IT and ITES units in the State on par with Special Economic Zones. |
| (d) |
Notifying IT & ITES units as continuous process units. |
| (e) |
Issuing special passes to vehicles transporting women workers of IT and ITES units during night times. |
| (f) |
Declaring IT and ITES units as public utility services and essential services. |
| (g) |
Exemption of IT & ITES units from clearances of Maharashtra Pollution Control Board. |
| (h) |
Suitably amending various labour laws for facilitating submission of reports/returns in electronic formats. |
| (i) |
Permission to IT and ITES units for self-certification of reports and returns. |
| (j) |
Constitution of a Committee under the Chairmanship of President, NASSCOM for drafting a Data Protection and Consumer Privacy Act. |
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| 4.5 |
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Fiscal Incentives: |
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| (a) |
100% exemption in Stamp Duty to all IT & ITES units in public IT Parks. |
| (b) |
75% exemption in Stamp Duty to all IT & ITES units in private IT Parks. |
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100% exemption in Stamp Duty to all IT and ITES units in ‘C', ‘D', ‘D+' and No Industry District areas as per Package Scheme of Incentives, 2001. |
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90% exemption in Stamp Duty payment for mergers, de-mergers and reconstruction of IT & ITES units all over the State. |
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Stamp Duty exemption also to non-IT entities such as leasing and financial institutions acquiring space/premises in private and public IT Parks for subsequent leasing to IT and ITES units. |
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Exemption in Stamp Duty to assignment leases under Section 60 and leave and licences under Section 36-A of the Bombay Stamp Act, 1958. |
| (g) |
Charging of Sales Tax at minimum floor rate of 4% on all IT products and non-IT products essential for IT and IT Enabled Services Units as approved by the Empowered Committee. |
| (h) |
Simplification of procedure pertaining to ‘F' form and ‘C' form. |
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| 4.6 |
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Support to IT and ITES Units by Urban Local Bodies: |
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| (a) |
Issuing Government directions to all Municipal Corporations for exempting imported capital goods and raw materials of IT and ITES units from levy of Octroi or Tax on entry of goods. |
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Issuing Government directions to all Municipal Corporations and Municipal Councils for levying property tax on all establishments/properties/buildings/premises of IT and ITES units on par with residential premises. |
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Grant of 100% additional Floor Space Index to all IT and ITES units in public IT Parks. |
| (d) |
Grant of 100% additional Floor Space Index to all IT and ITES units in private IT Parks of specified sizes by paying certain premium. |
| (e) |
Issuing of permission to erect towers and antennae as part of building plan approval. |
| (f) |
Issuing of Government directions to all Municipal Corporations and Municipal Councils for single window interface for all clearances/approvals/licences required by IT and ITES units. |
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| 4.7 |
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Rewarding outstanding performance of IT and ITES units: |
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| (a) |
Celebrating 20th August every year as the Information Technology Day of the State. |
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Presentation of State awards for outstanding performance to IT & ITES units on the Information Technology Day every year. |
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5. |
DEFINITIONS : |
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In the context of the Policy, the Information Technology industry consists of IT Software, IT Hardware, IT Services and IT Enabled Services as defined below:
IT Taskforce of Government of India has defined IT Software as follows: |
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| (a) |
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IT Software: |
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IT Software is defined as any representation of instruction, data, sound or image, including source code and object code, recorded in a machine readable form and capable of being manipulated or providing interactivity to a user, with the means of a computer. |
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| (b) |
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IT Hardware: |
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IT Hardware covers approximately 150 IT products notified by Directorate of Industries (APPENDIX I). |
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| (c) |
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IT Services and IT Enabled Services: |
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These include various IT Services and are defined by the IT Task force of the Government of India as follows :- |
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"IT Service including IT Enabled Service is defined as any unit that provides services, that result from the use of any IT Software over a Computer System for realizing any value addition". |
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The Directorate of Industries has prepared and published an illustrative list of such IT Enabled Services (Appendix II) which is updated from time to time. |
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6. |
INSTITUTIONAL FRAMEWORK FOR POLICY INPLEMENTATION : |
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| 6.1 |
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Empowered Committee: |
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To guide and supervise implementation of this Policy, an Empowered Committee is hereby constituted. This Empowered Committee shall be competent to periodically review the list of products and services falling under IT and IT Enabled Services and amend such lists from time to time as required. This Committee will also be competent for fixing norms, terms and conditions of eligibility (including amount of premium to be charged) of private IT Parks for availing additional 100% FSI. |
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| 6.2 |
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6.2: The Empowered Committee will have the following composition: |
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| 1) |
Chief Secretary - Chairman |
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Principal Secretary (Finance) - Member |
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Principal Secretary (Industry) - Member |
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Principal Secretary-I - Member (Urban Development) |
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Secretary-II (Urban Development) - Member |
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Secretary - Member (Information Technology) |
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Municipal Commissioner - Members (Mumbai, Thane and Pune Municipal Corporations) |
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Development Commissioner - Member-Secretary (Industries) |
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| 6.3 |
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The Empowered Committee, if necessary, will consult with or invite representatives of institutions like NASSCOM, STPI, Private IT Parks and others for its meetings. |
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UNIQUE INFO INFRASTRUCTURE : |
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| 7.1 |
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Since faster growth of IT & ITES units can take place in urban areas, the government will provide incentives to promote setting up of public IT parks by government infrastructure agencies and private IT parks by private investors/developers in the state. These parks will have excellent infrastructural facilities for 24 x 7 x 365 working environment |
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| 7.2 |
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All district headquarters and most of the taluka headquarters in the State have already been connected through optical fiber cable network. The Government shall endeavour to provide cost effective and reliable telecom connectivity throughout the State. IT and ITES units in the State will be able to leverage the unique advantage of low cost overseas connectivity available in the State. |
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| 7.3 |
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For easy access and rapid movement of goods and persons in the IT parks, they will be connected to the main highways through high quality road network. To supplement investments by the State Government and Urban Local Bodies, developers of private IT parks will be permitted to invest funds in establishing such high quality road connectivity from the highways. Such roads will be transferred to the developers by the Urban Local Bodies and recovery of the investments of the developers would be adjusted against the property tax payable to the Local Bodies in future. The State Government will issue necessary directions to the Urban Local Bodies for this purpose. |
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| 7.4 |
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For reliable and quality power supply round the clock, Private IT parks and Public IT parks will have freedom of unlimited back up power, permission for captive power generation and status as ‘Independent Power Producers'. |
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| 7.5 |
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5 IT and ITES units shall be declared as continuous process units and shall be exempted from statutory power cuts to enable them to perform on 24x7x365 basis. |
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| 7.6 |
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IT and ITES Units will be entitled for supply of power at industrial rates under the MERC tariff orders. These units will be categorised as a separate group of consumers through the MERC. |
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8. |
DEVELOPING A POOL OF GLOBALLY EMPLOYABLE MANPOWER : |
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| 8.1 |
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For ensuring ready availability of skilled and competent manpower for the IT and ITES industry, which would be employable all over the World, the Government will facilitate development of such a pool of man power. School Education and Higher & Technical Education departments will impart training in English languages skills (English speaking, appropriate accent and communication skills) to the youth in the State. |
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| 8.2 |
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Private Training Institutions, and IT and ITES companies shall be offered infrastructural facilities in schools of the Municipal Corporations, Municipal Councils and Zilla Parishads on a lease basis, during non-working hours of schools, for conducting training in IT, ITES related skills as well as English language skills. |
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INDUSTRY FRIENDLY AND SUPPORTING ENVIRONMENT : |
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| 9.1 |
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The State Government will endeavour to provide industry friendly and supportive working environment for the IT and ITES units in the State. To enable IT and ITES units to work efficiently on 24x7x365 basis, provisions under the Shops and Establishments Act have been relaxed for working hours, work shifts and employment of women. |
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| 9.2 |
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All relaxations under the Industrial Disputes Act and Contract Labour Act approved for units in Special Economic Zones shall be made applicable to all IT and ITES units in the State. |
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Reports/Returns in electronic formats will be accepted as per provisions of IT Act 2000. To enable IT and ITES units to submit reports and returns in electronic formats, necessary amendments in the following Labour laws shall be made. |
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- Employees State Insurance Act
- Factories Act
- Payment of Wages Act
- Minimum Wages Act
- Contract Labour Act
- Shops and Establishments Act
- Workmen's Compensation Act
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| 9.4 |
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IT and ITES units shall be allowed to file self-certified reports/returns to concerned Officers of Labour Department. |
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| 9.5 |
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ITES shall be declared as Public Utility Services under the Industrial Disputes Act and as Essential Services (for more than six months) under the provisions of Maharashtra Essential Services Maintenance Act 1999 by necessary amendments in these laws. |
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| 9.6 |
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Since IT and ITES units do not cause any pollution, they shall be exempted from the requirement of NOC from MPCB. In case exceptional situations arise in future, a negative list of such exceptional cases shall be notified. |
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| 9.7 |
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20th August every year will be celebrated as the Maharashtra Information Technology Day. State awards for outstanding performance to IT and ITES units will be presented on this day. |
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| 9.8 |
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Relaxation with respect to labelling of items/products of IT and ITES units Under the Weights & Measures Act will be permitted and working procedure will be simplified in consultation with Government of India . |
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| 9.9 |
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Since IT and ITES units work on 24 x 7 x 365 basis (round the clock throughout the year) and they employ women workers, a special group shall be appointed in the police department. Vehicles of IT and ITES units transporting women workers during night hours will be issued special passes/permission. |
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| 9.10 |
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Data Protection : |
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To prepare draft of a Data Protection and Consumer Privacy Act, a committee shall be formed under the Chairmanship of President, NASSCOM. Such an Act will be enacted thereafter. |
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10. |
FISCAL INCENTIVES : |
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IT and ITES units in the State shall be entitled for the following fiscal incentives. |
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| 10.1 |
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Stamp Duty Exemption: |
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| (a) |
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Sales Tax on sale of IT products has been reduced to a minimum floor rate of 4% as notified by Finance Department, vide Notification dated 11th August 2000. Under this Notification, certain IT products and essential non-IT products required for IT Enabled Services are not included. The Empowered Committee shall finalize a list of such products/items and sales tax on all products in such a list shall be charged at the minimum floor rate of 4%. |
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| (b) |
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When an IT/ ITES unit effects a transfer of assets related to IT and IT Enabled Services from one branch to another, filling up of ‘F' form is compulsory. The Government will attempt to get this requirement deleted with consent of the Government of India and also to simplify the working procedure in this regard. |
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| (c) |
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Submission of 'C-Form' is compulsory for units in the State while buying products from other States, failing which 10% sales tax is levied on the transactions. Banks, IT and ITES firms are not in a position to submit C-Form and hence they are required to pay higher rate of sales tax. The Government will attempt to get this procedure simplified, with the consent of the Government of India. |
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Presently, 14% Contract Tax is being charged on annual maintenance agreements for IT products. Since proportion of spare parts required for maintenance of such products is very small, a maximum of 5% works contract tax on annual maintenance agreements of IT and ITES units shall be charged in the State. |
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SUPPORT TO IT AND ITES UNITS BY URBAN LOCAL BODIES: |
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Rapid Growth of the IT and ITES industry in urban areas will benefit Urban Local Bodies in many ways. Therefore, the Government will endeavour to associate the Urban Local Bodies as partners with its efforts to support the IT and ITES units. In partnership with the ULBs, the following support will be made available to IT and ITES. |
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| 11.1 |
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Octroi / Entry Tax : |
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| (a) |
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To make IT and ITES units in Maharashtra competitive with similar units in other States, directions shall be issued to all the Municipal Corporations in the State for exemption in Octroi/Entry Tax to such units, on all capital goods and raw materials purchased by them. Such an exemption to IT and ITES units will also be granted by Municipal Corporations from any other alternative tax, if levied in place of Octroi. |
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| (b) |
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Capital goods and raw materials imported within the municipal limits by IT and ITES units were exempted from Octroi by the BMC upto May, 2002. This exemption will be restored by the BMC for the IT and ITES units. |
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| (c) |
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To attract and promote the IT and ITES units in Mumbai and other urban areas, the Government shall issue directions to all Municipal Corporations and Municipal Councils to levy property tax on all establishments/properties/buildings/premises of IT and ITES units on par with residential areas in their respective municipal limits. |
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| (d) |
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100% additional FSI shall be made available to all IT and ITES units in Public IT Parks in the State. |
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| (e) |
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100% additional FSI shall also be made available to all registered IT and ITES units located in Private IT Parks, approved by Directorate of Industries in the State. However, to avail of this additional 100% FSI, the private IT parks will have to comply with certain norms and terms. The Empowered Committee referred in Para-6 shall fix such necessary norms and terms, including the premium to be charged from the parks for eligibility of the parks for this. The Empowered Committee shall review such norms and terms of eligibility on a regular basis for ensuring proper utilization of the additional FSI. |
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| (f) |
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Permission for erecting towers & antennae up to the height prescribed by the Civil Aviation Department shall be granted by the concerned Municipal bodies at the time and as part of approval of the building plan itself. |
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| (g) |
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The Brihan-Mumbai Municipal Corporation (BMC) and MIDC shall expeditiously complete improvement work of approach roads leading to SEEPZ and Marol MIDC area from the Mumbai Airport. |
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| (h) |
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To support rapid growth of the IT and ITES industry, roads connecting the IT Parks to main highways have to be of very high quality. Therefore, the roads connecting Private/Public IT Parks to the main highways shall be transferred to the developers of Private and/ or Public IT parks for development by investing their own funds. To facilitate the developers to recover such an investment, future property tax accruals to the Municipal Corporation/Council on new properties in the IT parks would be adjusted against such investments. The Government shall issue necessary directions to all Municipal Corporations and Municipal Councils in this regard. |
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| (i) |
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Various permissions, approvals and registrations to IT and ITES units required from the Municipal Corporations need to be issued expeditiously. To facilitate this, the Government shall issue directions to all the Municipal Corporations to implement a single window interface for expeditious processing of such permissions, approvals and registrations. |
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Copyright © 2007 The Estate Agents’ Association of India. All rights reserved.
308, Gundecha Chambers, 3rd floor, Nagindas Master Road, Fort. Mumbai - 400 023 |
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