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.
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