Budget 2023-24 Expectation: IT sector demands changes in SEZ procedures, relaxations in CSR mandates

At a recent event organized by FICCI, Union Minister Nitin Gadkari said India is the fastest growing major economy in the world, and is set to achieve a GDP of $5 trillion by FY 2024-25. This is an ambitious target, but a realistic one given the strong and consistent growth of the Indian economy even in the face of global headwinds. With the rapid pace of digital transformation and adoption of emerging technology, the IT sector is poised to play a pivotal role in helping the country achieve this objective. Industry leaders are eagerly awaiting the forthcoming Union Budget FY 2023-24 for any developments that will become beneficial to the IT sector. Here are a few areas where changes would be welcome: Special Economic Zones (SEZ) rules Over the last two decades, SEZ’s have played a key role in India’s rapid economic development – promoting exports, encouraging domestic and foreign investment, facilitating infrastructure development, driving job creation, and more. Technology companies, too, have benefited tremendously from SEZ’s. However, there are a few changes in SEZ rules that can be made which would help the sector better take advantage of these benefits. Smoother processes for the movement of goods between two SEZ units would tremendously help firms. Scrapping of old computers and laptops, after paying the residual duties in the open market, would be another welcome move. Last year, the government introduced a comprehensive set of rules and regulations governing work-from-home for SEZ employees. Simplifying the permissions process for remote working would be very helpful for firms based in SEZ’s. Make compliance with CSR rules less onerous The government recently made a few amendments to the CSR rules – mandating that companies need to comply with CSR-related obligations if there is any unspent amount in their CSR accounts, as well as raising the limits for expenditure on impact assessment that could be counted towards a company’s total CSR expenditure. A few additional steps which can be taken, as part of the Budget, is to make compliance with CSR provisions less onerous for companies. Firstly, it would be appreciated if there is a relaxation in the mandatory spends on CSR activities for firms with a Rs 5 crore net profit, by increasing the threshold to firms with a net profit of Rs 50 crores. Secondly, while calculating net profits, the remuneration paid to professional employee directors should not be added back. These moves would certainly ease some of the burden on MSMEs in particular. Revise personal IT limits There are a lot of expectations from this Budget in terms of personal income tax from adjustments to the income tax slabs, hiking standard deduction, increasing 80C exemption etc. Tax experts are predicting that there will be some tax reductions in order to increase disposable income and stimulate spending in the economy. From a business point of view, it would be highly beneficial if the Budget revises the existing personal income tax thresholds. Moreover, in order to simplify tax compliance, the numerous tax exemptions can be done away with. This can be accomplished by considering an alternate method of tax computation – without exemptions, but with lower rates and higher basic exemption limits. Changes in SEZ procedures, relaxations in CSR mandates, and revisions in personal income tax limits are just a few of the measures that the upcoming Union Budget can take to ease compliance and some financial burden for IT firms. This will enable the sector to redouble efforts towards helping India leapfrog and eventually cross the $ 5 trillion GDP finish line. The writer is CFO, Fulcrum Digital Inc.—business platform and digital solution engineering company – @fulcrum_digital Views expressed are personal. Read all the Latest News , Trending News ,  Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.