Budget 2007: Industry Association Reaction

Umang Mehta Spokesperson T.A.I.T

Budget has been a non-event for IT hardware Industry. Practically no changes. We welcome and are happy that our memorandum asking for increase in SSI limit has been heard partially. The SSI limit has been raised to 1.5 crores even though we had asked for it to be increased to Rs 3 Crores. As far as end users are concerned there has been no change.

Alok Shende - Frost & Sullivan India Director, ICT Practice

The budget received six points out of 10 from Alok Shende, director- ICT Practice at Frost & Sullivan India. “With the introduction of MAT every IT company has to pay tax. Tax holiday, which was given for the IT industry has helped this sector and personally I feel that IT companies can pay the tax.”

Commenting about the employee stock option plans coming under the fringe benefit tax regime (FBT) he said that this was expected. “In a way, ESOPs makes way for the wealth creation. The government feels that it has all the right to tax which heals in wealth creation. Also I need to add that usually companies provide stock options to executive level employees and I think they can pay up."
Stellar Search and Selection Founder & MD, Shailja Dutt

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“In my own estimate the budget is progressive and forward thinking. It is positively focused on sectors like agriculture, education and healthcare which have been on young India’s wish list this year. Inflation continues to be a huge concern for the common man and one needs to look at both interim and long term solutions to address the same,” said Shailja Dutt, founder and managing director, Stellar Search and Selection.

NASSCOM STATEMENT ON UNION BUDGET

NASSCOM is dismayed at the proposal to extend MAT on export incomes which are exempted under Sections 10A and 10B. This is a regressive step that withdraws government’s commitment to provide tax incentives till 2009, on the basis of which companies have made their business plans and investment decisions. This could affect investor confidence and growth in this sector which is not only India’s biggest exporter (US$31.6 billion in 2006-07) but is the biggest employer in the organised private sector. It is our expectation that the introduction of MAT will be accompanied by an extension of the STPI scheme (and Section 10A, 10B benefits) by 10 years, as suggested unanimously by the IT industry. In order to sustain the growth momentum, this decision is required urgently.

We are also concerned with the selective pass-through status for venture funds and service tax on property lease, steps that will particularly affect SMEs and start-ups. The pass-through does not seem to include the BPO sector (including animation, gaming and KPO), a segment which accounts for about three-fourths of the IT sector venture funding.

Higher costs for leased space will adversely affect SMEs, which do not own office space, and reduce the competitiveness of India vis-