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.