National Association of Software and Services Companies (NASSCOM), the apex body of IT and ITES industry, has requested the Centre to extend the STPI scheme for one year and also consider incentives based on location or innovation for employees of the Small and Medium Enterprises (SMEs).

NASSCOM expects that the IT industry may witness attrition levels and average salary hikes at 10-12 per cent in the next year.

According to Som Mittal, president NASSCOM, as the Software Technology Parks of India (STPI) scheme benefits are coming to an end this month, incentives are required to keep the momentum.

"We had requested the government that as you are ending the benefit of STPI by March 2011 and starting the DTC (Direct Tax Code) in 2012. So for one year there is no coverage. So at least for one year you extend (STPI scheme).

It could be employment-based incentive, location-based incentive, and innovation-based incentive to encourage the SME," Mittal told media persons here.

Mittal was in the city to participate in NASSCOM's first Global Captive Conclave 2011, which began yesterday.

NASSCOM which requested the government to rethink on the imposition of Minimum Alternate Tax (MAT) on companies that were set up in SEZs, is hopeful of a positive outcome.

Mittal said the topic will come up in the Parliament during the discussion on budget.

"The SEZ scheme is eligible till 2014. Any unit that comes up till 2014 will be eligible (for MAT exemption). Any unit that comes up till 2014 there should not be MAT after that you put the MAT. So we have a continuity of sovereign promise. You said you will do it. So people (companies) have invested. Don't change the rules," he said. (More) PTI GDK VKV

The governments' reluctance to extend the STPI schemes beyond this year did not go well with the USD 76 billion industry.

Besides the Finance Minister in the 2011-12 budget brought SEZs under MAT regime. The introduction of 18.5 per cent MAT with an effective rate of about 20 per cent is set to negate the impact of profit linked tax exemptions under DTC.

To a query on the attrition levels in the industry, Mittal said, the IT sector witnessed a downward trend of 3-4 per cent.

"We cannot generalise the figure. As a dynamic industry 10-12 per cent is good attrition level. Even if it is anywhere between 10-15 per cent it is manageable one. It had exceeded 20 per cent in some cases. Salary hike is linked to this. For the year 2011-12 our expectation on salary hike will be in the range of 10 to 12 per cent," he added.

Mittal was confident that the industry would touch USD 75 billion as expected in this year and see a growth of 16-18 per cent in FY 12.

"The IT and ITES export revenues would touch USD 60 billion this year and domestic business would touch USD 15 billion," he said.