The association demanded continuation of the existing tax exemption facilities for the sector until FY 2010.

"Basis feels the proposed introduction of 10 percent income tax is going to hamper the growth of the industry and at the same time will cause harm to national interest," Basis President Sarwar Alam told reporters at a press conference.

He said software industry in the country is still in a premature stage. As experienced by other countries, the industry needs some more time and big amount of investment for reaching a mature level.

Citing examples from different countries he said, since it takes long time to get the return from this sector, different countries provide special tax incentive to attract investors for investing in software sector.

He urged the government to allocate two percent of the annual development programme (ADP) for purchasing locally produced software.

Alam also called upon the government to extend similar tax exemption benefits to IT-enabled services business.

Considering the increasing demand for automation and computerisation, the size of the country's software market is presently estimated at Tk 250 crore, which will be increased by 100 percent within a few years, a Basis official said.