In the newly substituted sections 10A and 10B of the Income-tax Act by the Finance Act, 2000, the meaning of "computer software" has been enlarged to include IT enabled services. An identical definition has been provided in section 80 HHE of the Income-tax Act also. The Central Board of Direct Taxes (CBDT) has issued a notification listing the following activities to be covered under IT enabled products or services:

Representations had been received from various quarters for specifying the activities to be covered under IT enabled services. While it is not feasible to provide a comprehensive list for a sector which is still evolving, the Central Board of Direct Taxes has issued a notification listing the above mentioned activities to be included in IT enabled services for getting the benefit of tax concession.

It may be mentioned that under Section 10A and 10B of the IT Act, 100% deduction on profit from Export and Sale upto 25% of total sales can be made in case of Software Technology Parks, Export Processing Zones, Export Oriented Units, Free Trade Zones and Special Economic Zones. Similarly, under Section 80HHE of the Income Tax Act, profits earned by any unit set up anywhere exporting computer software and specified IT services are exempt from taxes subject to 20% phasing out introduced in the last budget.