Around 120 large scale companies like Zoho, Quickheal, etc have urged the government to do away with tax deducted at source (TDS) on local software products and Softex forms that assess the value of a product each time it is exported.
A letter through iSPIRIT(software product industry lobby group) has been sent again and again to Union Minister of Electronics and IT Ravi Shankar Prasad but there have been no reforms by the government.
“After the GST became central to all sales and purchase data, these provisions are totally redundant, especially for the software products industry”, said Sudhir Singh, Fellow at iSPIRT.
According to the report. Elimination of the Softex forms will dramatically increase ease of doing business for product companies, specifically for SaaS companies. India’s pure-play SaaS companies generated revenue of $2.5 billion in the financial year 2020 and have the potential to grow to $13-$15 billion by 2025.
The mission is to transform India from an IT services to an IT products destination in order to reach the $5 trillion GDP dream by 2025, said Suresh Sambandam, CEO of SaaS firm Kissflow.
“These are very simple, straightforward changes we are expecting,” said Sambandam.
Sambandam is a council member of the National Software Product Mission. This committee was formed to find areas where software products can improve.
The IT ministry should remove hurdles around ease of doing business for the software products industry, said Nakul Saxena, Director-Policy, iSPIRT.
The Indian Software as a Service (SaaS) industry touched $3.5 billion in revenue in the financial year 2020. By 2025, the addressable global opportunity for SaaS companies is expected to be worth $400 billion, as per a study by Nasscom.
These two changes can drastically improve the condition of the Indian software sector and the companies would be more competitive to the global companies in this sector.