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Originally Posted by LandCruiser

Not a full tax holiday. They do have stuff like OMAT: Operating Margin After Tax. So there is tax but may be less until 2009. (OT)

It is a full tax holiday till 2009. And the IT companies and NASSCOM are busy lobbying for another 10 year extension till 2019.

What they pay now is MAT ( minimum alternate tax ) , which was specifically introduced to bring companies into tax net , which were avoiding the same by using many such loopholes. Now they also pay FBT ( fringe benefit tax ) like other industries , on perks given to their employees.

There is no tax on operating margins as far as I know. All Indian companies will start showing negative margins , just to avoid taxes then

Operating Margin After Tax - is not any Tax paid to the Government . It is just a measure of profitability , after accounting for taxes . All Balance sheets will have this column.