Budget 2007: CXO Bytes

CXO Bytes

Sattik Ghosh, Proprietor, Neocom Avenues:

If rentals are going to be under service tax now, then small companies who have rented their offices and now have to pay an additional 12% service tax, it will increase costs and reduce profitably considerably. This is very tough for small companies who already face so many problems. Also paying eduction cess 1% on all taxes are again increasing taxes for small companies. Not sure the exact implications of this but it doesn't sound good to me.

Mahesh Mansukhani, Director/Proprietor (VOIP & Wi-Fi division), BlueOyster Software Inc:

The budget is not really up to my expectation. Far from removing taxes, we will now have to deal with sales tax. The new rules state that anyone renting a property for commercial use will now be faced with a sales tax of 12.5 percent. Also my hope of the legacy tax being repealed has not been heard. Finally as an SSI i am still in the tax bracket... we were hoping to get the SSI raised to 3 crores.. its been raised to just 1.5 crores.

Canaan Partners Executive Director, Alok Mittal:

Highlights of the Budget for Venture Capital and IT:

There is a Pass-through status for Venture Capital (VC) investments in research in new chemical entities, dairy, poultry, bio-fuels, biotech, IT, nanotechnology.

Minimum Alternate Tax (MAT) has been extended to IT companies; IT companies to pay 11.22% of adjusted book profits. The E-governance allocation is to be increased from Rs.395 to Rs.719 crore. This will enable greater efficiencies in government administration, improved citizen-government interaction and a positive multiplier effect on the pace of IT adoption in the country.

Regarding ITI's, another 300 ITI's are expected to be covered by August 2009. Interest free loan of up to Rs 2.5cr for upgradation of ITI's. ITI's encouraged to start a second shift.

Rs. 33 crore to be invested in manpower development for the software export industry.


The government actions should include lowering costs for the end user by rationalizing taxes that impact IT services, software and hardware domestically and put in place policies that encourage investment. Extension of the tax holiday for the IT sector is a critical aspect to creating a sound IT infrastructure in the country .Tax rebates for individuals investing in computers and subscribing to broadband access in rural areas would provide sufficient incentive for creating rural entrepreneurs to run and manage such kiosks. This would ultimately help in taking the benefits of IT to rural areas and usher in IT-led development.

EVS Chakravarthy, CEO ,YouTelecom:

The reaction from Broadband ISP industry is currently neutral. The budget statement says there is a lowering of import duty, but we have yet to work out the tarrif details etc. Also, it is not clear whether the cut in import duty applies to CPE( Customer Premise equipment). If it does, then the cost of broadband connection for end consumers may be lowered. But then again, this will not be a substantial reduction- it will be a marignal lowering of price. we are in the process of calculating the tariffs right now, but do not forsee any substantial changes.

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