New Delhi, April 17: Government may extend income tax holidays to small and marginal IT companies beyond 2009, IT and Communications Minister A Raja said today.

Exemption from paying income tax for IT companies is to end in 2009.

"I have met Prime Minister (on the issue). PM is inclined to give some relief.... We are of the view that small and marginal enterprises should not suffer. The matter is under consideration," he told the Rajya Sabha during the Question Hour.

Raja said he had also met Finance Minister P Chidambaram on extending tax break for another 10 years but the "Finance Minister had some reservations."

The extended tax breaks should not go to big and flourishing companies who have already utilised the previous tax breaks, he said, but did not specify when a decision would be taken.

The Minister said the slowdown in the US economy has so far not had any overall significant direct impact on the growth of the Indian IT-BPO sector. However, the share depreciation of the US dollar over the past year has added significant margin pressure on the IT industry.

Raja said industry body NASSCOM does not have any information on reduction in salaries in IT industry but there had been indications that the annual increments to employees may be slightly lower.

The National Association of Software and Services Companies (NASSCOM) has indicated that the data on salary cuts if any would be available only after the analysis of the annual results to be announced by the companies.

Raja said it is estimated that IT exports will be around USD 40.3 billion in 2007-08 as against USD 31.3 billion in 2006-07, a growth of around 28.3 per cent.

"However, the outlook for business in the coming year is still cautious, as US clients appear to be delaying their IT-BPO budget decisions," he said.

Further direct employment is expected to grow by 23 per cent to reach around 2 million in 2007-08. This is an increase of about 3,75,000 professionals over 2006-07.