Tech cos feel let down by Budget

Group of Technology Companies (GTech) has expressed disappointment over the industry-specific stance of the Union Budget presented by the Finance Minister, Mr Pranab Mukherjee, on Monday.

While agreeing that the Budget is aimed at ensuring the inclusive growth of the economy, GTech felt that the Government should have considered extending the STPI (Software Technology Parks of India) scheme for a specified period for units operating at least in tier-2 and tier-3 cities.

MAT WORRY

Mr V.K. Mathews, Chairman, said that GTech welcomed the proposals such as changes in the income-tax slabs and the proposed implementation plan of the Direct Taxes Code and Goods Services Tax by April 2012.

However, increase in minimum alternate tax (MAT) from 18 per cent to 18.5 per cent and non-extension of STPI scheme would hit the IT companies operating in the State.

“The least the Government should have done was to keep MAT at levels prevalent internationally, which is at one-third of the corporate tax,” Mr Mathews said.

A small consolation for the small and medium enterprises was the opportunity being offered to convert smaller firms to limited liability partnerships (LLPs) and not subjecting them to capital gains tax.

EXPENSIVE OPTION

It is also worth recalling at this juncture that LLPs are not subjected to MAT when located in an SEZ.

On the flip side, though, this will mean that the SMEs will have to ramp up their infrastructure in relatively expensive SEZ spaces quite soon.

“We were hoping that at least an investment-based tax relief would be provided for existing STPI units,” said Mr Anoop P. Ambika, Secretary, GTech.

The allocations for the infrastructure, agriculture and health sectors would ensure the sustainable growth of the economy, the GTech felt.

Appreciating the fiscal prudence in containing the fiscal deficit to a new target of 4.6 per cent, GTech felt that this would send a positive signal to investors with regard to the country's economic outlook.

Budget a disappointment for IT sector, says GTech

Thiruvananthapuram: The Group of Technology companies (GTech) has expressed the IT/ITES industry's disappointment over the Union Budget 2011-12 presented by the Finance Minister on Monday.

In a press note issued here, GTech said that the Union government should have considered extending the STPI (Software Technology Parks of India) scheme for a specified period for the IT industry operating in tier 2 and tier 3 cities.

MAT

V.K. Mathews, Chairman GTech said, “GTech welcomes the proposals like the changes in the income tax slabs and the proposed implementation of the Uniform Direct Tax Code and Goods Services Tax (GST) by April 2012.

However, the increase in Minimum Alternate Tax (MAT) from 18 per cent to 18.5 per cent and non-extension of STPI scheme will hit IT companies in the State. The government should have kept the MAT at the levels prevalent internationally at one third of the corporate tax.”

Good side

According to Anoop P. Ambika, Secretary, GTech, “The proposal to convert smaller firms to limited liability partnerships by not subjecting them to capital gains tax is a relief for SMEs. It is also good to note at this juncture that limited liability partnerships are not subjected to MAT when located in a Special Economic Zone.

On the flip side, this will mean that the SMEs will have to ramp up their infrastructure in relatively expensive SEZ spaces quite soon. We were really hoping that at least an investment-based tax relief would be provided for the existing STPI units.”

GTech said that the budget allocation for infrastructure, agriculture and health sectors would ensure the sustainable growth of the Indian economy.

Appreciating the Finance Minster for fiscal prudence in containing the fiscal deficit to a new target of 4.6 per cent, GTech felt that this would send a positive signal to investors on India's economic outlook.

Budget a disappointment for the IT Industry

Group of Technology companies (GTech) have expressed the IT /ITES Industry’s disappointment over the Union budget 2011-12 presented by the Finance Minister. Though the budget is aimed at ensuring the inclusive growth of the Indian economy, GTech felt that Union Government should have considered extending the STPI scheme for a specified period for the IT Industry operating in the tier 2 and tier 3 cities.

Mr. V K Mathews, Chairman GTech said “GTech welcomes the proposals in the budget like changes in the Income Tax Slabs and the proposed implementation plan of the Uniform Direct Tax Code and Goods Services Tax (GST) by April 2012. However the increase in minimum alternate tax from 18 % to 18.5 % and non-extension of STPI scheme would hit the IT companies operating in the state. The Government should have kept the MAT at the levels prevalent internationally at one third of the corporate tax.”

“A sigh of relief for the SMEs was the facilitation to convert smaller firms to limited liability partnerships by not subjecting them to capital gains tax. It is also good to note at this juncture that LLPs are not subjected to MAT when located in an SEZ. On the flip side this will mean that the SMEs will have to ramp up their infrastructure in relatively expensive SEZ spaces quite soon. We were really hoping that at least an investment based tax relief would be provided for the existing STPI units” said Anoop P Ambika, Secretary, GTech.

GTech said that the budget allocation for the Infrastructure, Agriculture and Health sectors would ensure the sustainable growth of the Indian Economy. Appreciating the Finance Minster for fiscal prudence in containing the fiscal deficit to a new target of 4.6 %, GTech felt that this would send a positive signal to Investors on India’s economic outlook.