IT industry downplays Obama's outsourcing move

The
$47-billion Indian software export industry on Tuesday sought to put up
a brave face on President Barack Obama's proposal to disallow tax
deduction for company's outsourcing their business, saying the move
will hit the US companies with "marginal" impact on India.

IT
body NASSCOM said it is still reviewing the tax proposals announced by
Obama. However, "prima facie, the proposals appeared to be aimed at
addressing the tax rate differentials that exist across the world and
if implemented, this would impact American headquartered companies with
overseas operations," it said.

It said
global companies that earn profits in India are subject to a tax rate
of 33.9 per cent (including surcharge and cess) and "the impact of the
proposed reforms on them would be marginal."

President
Obama had yesterday proposed an end to tax deductions on those US
companies which create jobs overseas in places like Bangalore.

Instead, the incentives would now go to those creating jobs inside the US, in places like the Buffalo city—bordering Canada.

"We
will use the savings to give tax cuts to companies that are investing
in research and development here at home so that we can jump-start job
creation, foster innovation, and enhance America's competitiveness,"
Obama said.