Financial Management & Corporate Finance Case Study

Taxing BPO: A Quandary

OR

Abstract:
India has emerged as a major destination for outsourcing, since the evolution (mid-1990s) of the concept of Business Process Outsourcing (BPO). BPOs have grown in number, size and services and have contributed to the Indian economy in terms of GDP and employment. On January 2 nd 2004, when the Central Board of Direct Taxes (CBDT), India, issued a circular levying tax on the BPO services, many wondered if the country is alienating the foreign companies that over the years have made India their destination for outsourcing services.

Pedagogical Objectives:

• To discuss the efficacy of the policy measures taken by the Indian government to make the BPO industry competitive
• To debate on how the CBDT's circular would affect the competitiveness of Indian BPO sector

Keywords : Business process outsourcing (BPO), Central Board of Direct Taxes' Circular, Finance Case Study, Growth of BPO in India, Contribution of BPO to Indian economy, Role of government io growth of BPO, Indian government's perspective on taxing BPO, Industry's reaction on taxing BPO in india