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January 5, 2004

India grants BPO tax break

The Indian government has given a tax boost to multinationals with business process outsourcing subsidiaries there by exempting their non-core operations from income tax.

By CBR Staff Writer

The decision is in response to growing confusion regarding new tax laws brought in last year, which said that call centers belonging to non-resident companies receiving calls were not taxable, but those involved in telemarketing were.

The government has now clarified that all BPO activities, which are considered to be incidental services, will fall outside the tax net. Core services, defined as those, which have substantial revenue implications for the parent company such as telephone software support, will be taxed.

The ruling is a boost to major corporations with captive BPO operations in the country such as Dell and Hewlett-Packard.

This article is based on material originally produced by ComputerWire.

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