IT stocks were unmoved after U.S. President Barack Obama called for putting in place an "offshoring tax" that would set a "minimum tax" on offshore earnings in order to encourage domestic investment and "prevent a race to the bottom in corporate tax rates."
"The American people deserve a tax code that helps small businesses spend less time filling out complicated forms, and more time expanding and hiring...a tax code that lowers incentives to move jobs overseas, and lowers tax rates for businesses and manufacturers that create jobs right here in America," he said in his speech on Tuesday.
President Obama talked briefly about the tax in his State of the Union Address, but more details were outlined in a policy paper released by the White House. However, there are no details yet about the rate at which the "offshoring tax" would be levied.
The BSE IT index, which comprises 12 companies from the outsourcing industry, traded 1.4 per cent higher against a 0.7 per cent gain in the Sensex as of 12.26 p.m. HCL Tech was up 3.3 per cent, while TCS traded 1.8 per cent higher. Infosys advanced 1.25 per cent gains.
President Obama has been opposed to outsourcing jobs to countries like India for some time now. During the presidential debates in October, President Obama said that he wanted to give tax breaks to companies that are investing in the United States.