What IT Expects From The Finance Minister This Year

Eminent analysts and industry stalwarts share their budget expectations:

The IT industry has reached a level of maturity where, starting from last year’s budget, the wish list doesn’t really need to contain tax sops or handouts of any kind. The focus should now shift to macro policy making to make India more business friendly over all, not just for IT. Priorities should be in the areas of the skills development program, promoting R&D and promoting the development of Tier 2/3 cities with some central allocations, along the lines of the JNNURM program.

Partha Iyengar, Vice President, Distinguished Analyst, Regional Research Director, Gartner India

The telecom sector has achieved a significant momentum in India but still, there is plenty to achieve. We are witnessing a huge surge in the smartphone space allowing consumers as well as enterprises to reap in real benefits of mobility. This is where government can play a vital role by re-considering the taxation module on mobile devices. This would help in the penetration of smartphones and make it affordable reaching out to larger section of the audience.

The growth of the country also lies in the upliftment of its core and in this regard, we can refer it to tier III & IV markets not only metros, tier I & II markets. It is high time for us to think hard and take concrete steps in this direction where certain initiatives and reforms can boost the overall state of the infrastructure e.g. Smartphone apps for farmers help in higher crop yield, education initiative and financial inclusion in rural sector. This would encourage the corporate fraternity to facilitate better communication outreach and offer seamless connectivity and customised service offering across all corners of our country.

Sunil Dutt, Managing Director, Research In Motion India

As the IT, ITeS and BPO industry have been significant contributors to India’s GDP; the Indian government has adequately provided concessions and provisions in the past to ensure growth in this sector. We are positive that they would continue the trend in this regard.

One of the main highlights in the last budget was enabling e-filing, e-payment of taxes, computerisation of commercial taxes and the creation of ‘Sevottam’ which has elevated the movement for country’s development in automated mechanism for tax administration. This has been crucial in boosting technology adoption amongst Indians. In this budget, we hope that the government enables more options in tax, pension and similar activities through an online platform to make it convenient for Indian citizens.

Another crucial matter that needs to be addressed by the Finance Minister is clearly demarcating the line between treating software as goods or services. Hence relevant taxes can be imposed and companies can comply with the appropriate laws. As the software products industry is largely reliant on the channel ecosystem, the government should consider reduction of TDS for software resellers from the prevailing 10% to 1-2% to align with the corporate tax rate. Further clarification is also required in the definition of ‘Place of Effective Management’ in the proposed Direct Tax Code, given that we are the Indian subsidiary of multinational company.

Jagdish Mahapatra, Managing Director, India and SAARC, McAfee

Given the sluggish economic growth, the corporate world has been anticipating an encouraging Budget from the Finance Minister this year. Among other enabling measures, the Government should take serious steps to develop infrastructure in the information technology and banking areas, especially in the non-metro areas.

Issues such as reduction in taxes and a sharper focus on the development of Tier 2 and Tier 3 cities is especially pertinent in this regard. We would urge the Government to provide more for education and skill-development, employment-friendly policies and infrastructure development in the smaller cities and towns.

More and better perks for SMEs/SMBs are also the need of the hour, as these segments are significant contributors to the overall economy. Even smaller banks must be encouraged to implement IT in their operations, and to computerise all their operations, as this would prove beneficial on a national scale.

It is time we encouraged IT companies that are servicing the Indian domestic sector. By providing incentives to encourage and build up domestic IT companies in India, the Government will send the right signals to the Indian IT industry.

Hanuman Tripathi, Group Managing Director, Infrasoft Technologies