Union Budget 2023-24: Pre-budget Expectation of IT Sector

This year’s Union Budget has evoked a mixed response from the tech and IT industry. Finance Minister Nirmala Sitharaman will present the Union Budget for the fiscal year 2023-24 on February 1. Things are expected to be different this time as India’s burgeoning digital economy is poised for expansion and its contribution to the government’s aim of a $5 trillion GDP by 2025. Some specific areas of interest for the tech sector in a budget include funding for artificial intelligence and machine learning research, investment in 5G and other broadband infrastructure, and support for startups and small businesses. The sector may also look for tax breaks, subsidies, and other financial incentives to promote growth and innovation. The tech industry expects that the government may reduce the minimum alternate tax (MAT) for eligible startups under Section 80IAC of the IT Act from 15% to 9%. This section allows companies with a turnover of up to INR 10 crore to do business without paying MAT. The government should also expand the safe harbour margins policy, which only applies to companies with turnovers of up to INR 200 crore. The current safe harbour policy allows such companies to avail tax benefits over up to 5 years (with a two-year extension if they spend more than Rs 30 crores in cash on R&D) or 5 years (with a one-year extension if they spend more than Rs 50 crores in cash on R&D). The sector has been riding the wave of success with newer technologies like AI, IoT, and 5G being used across industries. However, one area where there needs improvement is the skill level required to enter these industries. Technology will be highly crucial for our economy to grow at a higher rate; therefore, the government should focus on skill development at schools and universities. The government will also need to look into security measures like cyber security, biometrics, and encryption to protect Indian businesses from potential cyber-attacks. More focus needs to be given by businesses to startups as it is often people who can help them go global faster rather than investing in massive factories that take ages to build. Technology has been helping businesses innovate rapidly, and digital infrastructure is one of the biggest priorities for the government to look after. There is significant space that can be given to digital infrastructure in the upcoming budget expecting it would help SMEs and SMBs in India further their growth and improve their competitiveness. However, some of the priorities for industry stakeholders and experts are primarily centered on the following five areas: Digital Infrastructure, more so with 5G being made available to the masses; Data Analytics, which will help enterprises and individuals alike in accessing data at a faster pace; AI (Artificial Intelligence), in ensuring better decision-making capabilities among consumers; Cybersecurity and IoT (Internet of Things). Along with this sector, skill development and job creation are also important aspects that have to be supported by the government in this budget, providing an impetus for India’s tech vertical. Hopefully, this budget will help the IT sector to formulate and reach a new milestone. (The writer is Managing Director & Co-Founder - ATechnos Group. Views 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.