After laying the foundation stone this morning of the ambitious Infocity project, which the government plans to set up on 200 acres of land on the outskirts of Gandhinagar, the Chief Minister announced a sales-tax holiday on all IT software for the next five years.

Patel said IT units would also be eligible for a turnover incentive at the rate of 5 per cent of the eligible annual turnover with a ceiling of Rs 50 lakh and that special incentives in the form of capital subsidy would be given to large units on a graduated scale.

Other sops announced by the Chief Minister included a reduction in incidence of sales tax on computer hardware and peripherals and provision of a special connectivity incentive by which the government would subsidise a maximum of 50 per cent of leased line rentals upto 500 kms. Also, IT units would be completely exempt from power cuts.

In Gandhinagar, technology parks and Infocities will have 50 per cent higher floor space index (FSI) and a new Information Technology Commissionerate will be created for administering this incentive scheme, Patel said, adding that a State-level committee to interpret and take decisions regarding incentives will be set up.

Since the investment in tangible assets tends to exceed the investment in intangible assets, this incentive policy has also defined intangible assets and incentives have been given to them as well to ensure faster growth of the IT industry and greater proliferation of IT culture in the State.