The Hindu Business Line : `Service tax on staff recruitment to drive up IT cos costs'

SOFTWARE association Nasscom has said expanding scope of service tax on manpower recruitment services to include supply of manpower — temporary or otherwise — could drive up costs for IT and business process outsourcing companies which used recruitment agencies to hire professionals.

"It will impact BPO and IT companies that use recruitment agencies to hire people. It will also raise the cost of temporary staff," the Nasscom President, Mr Kiran Karnik, said here.

Although the announcement was across the board, he said the software industry would be visibly impacted as it hired more human resources.

"It is not a big surprise as there has been a clear attempt by Government to bring more and more things under the service tax net, in the last few years. Since this move will increase the cost for the IT players, it is a matter of concern," he said, while adding that the association was yet to compute the additional cost burden on the industry on account of this decision.

"I expect that it will lead to a small cost addition," he added. Nasscom plans to study the Budget announcements in detail and approach the Government with a post-Budget memorandum on various issues next week.

The Union Budget announcement, earlier this week, that the scope of service tax on manpower recruitment service will include even temporary supply of manpower, has triggered industry apprehension that IT service providers which deploy personnel on a temporary basis to work on designated projects that are outsourced to them by other companies would have to pay service tax.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
`Made in India' tag hot among telecom equipment buyers

Kanara Chamber for IT park in Mangalore

AP IT policy targets holistic development

`Service tax on staff recruitment to drive up IT cos costs'

Vignette to set up hybrid global development centre — To expand R&D work

Draft VAT rules to be on Web site in Bengal

Spices Board launches worldwide direct sale

Agilent Tech offers `dream' project for engg students

Looking back

Raritan bullish on data centre market

Descon Soft to expand call centre seats in Kolkata