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.
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