Union Budget 2012 misses big ticket economic reforms: GTech

Group of Technology companies (GTech) representing the IT / ITeS industry in Kerala has expressed the view that Union budget 2012-13 presented by the Finance Minister missed the opportunity to make bold economic reforms. However, GTech welcomes moves like reduction in customs duty on a host of items, larger outlay for agriculture, incentives for the aviation industry and increased emphasis on the usage of IT for effective service delivery.

Interacting with the media after a Budget viewing session organised by CII Trivandrum Zone, V K Mathews, Chairman, GTech and Executive Chairman, IBS Group, who is also the Chairman, CII Kerala Chapter, said, “The political compulsions seem to have held the Finance Minister from making big ticket announcements. While the steps towards financial consolidation are appreciable, no corrective action on Minimum Alternative Tax (MAT) for SEZ has been taken. We must remember that MAT destroyed the SEZ scheme and STPI benefits were stopped. Tax concession on R & D is definitely a step in the right direction and should benefit the IT industry. Also surprising is that no requests from Nasscom have been addressed in this budget.”

Meanwhile in a release, Anoop Ambika, Secretary, GTech said, “It is good to note that the current rates of corporate taxes have been maintained. What is disappointing is that the Finance Ministry seems to be in a mute mode on some of the major issues that is troubling the IT industry such as transfer pricing, taxation on packaged / downloaded software, double taxation, etc. Also there seems to be no incentive for investors looking at the Tier II / III cities for their further expansion”.

“GTech recommends that the State government in its budget sets up an SPV under the Kerala State IT Mission to make use of central funds and augment entrepreneurship in the State”, added Anoop.

Budget lacks bold steps for reforms: GTech

The Group of Technology Companies (GTech) representing the IT/ITeS industry in Kerala has expressed the view that the Union Budget for 2012-13 has missed the opportunity to make bold economic reforms. “Political compulsions seem to have held the Finance Minister from making big ticket announcements. While the steps towards financial consolidation are appreciable, no corrective action on Minimum Alternative Tax (MAT) for Special Economic Zones (SEZ) has been taken.

Tax concession on Research and Development is definitely a step in the right direction and should benefit the IT industry,” says V.K. Mathews, chairman, GTech, and executive chairman, IBS Group, here on Friday. Anoop Ambika, secretary, GTech, said, “It is good to note that the current rates of corporate taxes have been maintained. The Finance Ministry seems to be mute on major issues troubling the IT industry.”

It is disappointment for IT industry

The Information Technology (IT) industry is aghast at the perceived neglect meted out to it in the Union Budget presented on Friday.

The National Association of Software and Services Companies (Nasscom), the premier industry body for IT and ITeS companies in the country, is all set to take up the issue with the Union government. “Though the budget has been presented, we hope to bring about some changes in it before it is passed,” V.K. Mathews, executive council member, Nasscom, told The Hindu .

He said the budget is disappointing and not at all favourable to the IT industry. The Minimum Alternate Tax (MAT) which diluted the very essence of the concept of Special Economic Zones (MAT) should have been changed. The tax regimen should have been streamlined to avoid proliferation of tax litigations, eliminating the possibility of sending out a message that the country is not fit for doing business.

Anoop P. Ambika, secretary of the Group of Technology Companies (GTech), said the Finance Ministry has maintained silence on some of the major issues troubling the industry, such as transfer pricing, MAT for SEZs, taxation on packaged or downloaded software, double taxation, etc., that will trouble the industry even more when the domestic market eventually matures for IT products and services. “Also, there seems to be no incentive for investors looking at tier-II and tier-III cities for their further expansion,” he said.

The only highlights seem to be the opportunities presented to the industry by the move to computerise the public distribution system and UID-based payments. Also, the small and medium sector will greatly benefit from the Rs.5,000-crore fund that has been set up for micro, small, and medium enterprises. The price rise caused by increased service tax and excise duty will take its toll on the industry by way of payroll expenses.

Joseph C. Mathew, IT adviser to former Chief Minister V.S. Achuthanandan, said the Finance Minister should not have completely neglected the industry. “Difference in taxes for the old Software Technology Parks of India units and the ones operating in SEZ is absolutely unacceptable considering that often the same products are exported from these units. Pressing issues of the industry like this should have been addressed in the budget. Also, an alternative for the STPI is also long overdue,” he said.

Infopark Chief Executive Office Gigo Joseph hoped that the IT industry may benefit from the budgetary allocation of Rs.50 lakh crore for the infrastructure sector.