Indian IT Co’s -Positive About Budget

A host of technology companies and NASSCOM shared their budget reactions with us over the weekend. Here is an abridged collation of what the industry leaders said:

NASSCOM:

–        Central excise and service tax registration in two working days through online submissions including digitally signed invoices will ease business processes.

–        Increasing the time limit to claim CENVAT credit from six months to one year aligns it with business cycles

–        Reducing the rate of income tax on royalty and fees for technical services from 25% to 10% will increase technology adoption in the country through lower costs

–        Authorising CBDT to issue clarifications on the Foreign Tax Credit will help the industry attain global competitiveness.

Some of the areas of concern include:

• Increase in tax rates for both service tax and net corporate tax rate
• Angel tax continues
• Dual Levies on software continues, and high rate of TDS (10%) on all software transactions including start-ups constrain cash flows
• SEZ revival: Nothing was articulated on issues like MAT
• No steps to mobilize domestic investors
• Lack of incentives to develop tier 2 / 3 locations, employment creation. Incentives announced in budget are restricted to the manufacturing sector.
• Measures for increasing access to government procurement for product companies and SMEs not provided
• Definition of royalty which is not aligned to global practices
• Place of provision of service related to export of testing of services etc.

Sanjay Rohatgi, Vice President, India, Symantec:

“Continuing on the direction set last year, this is an excellent budget focusing on the outcomes and not just the outlays.”

Soon Kwon, MD, LG India:

“We welcome the changes in taxation policy, with the reduction in corporate tax over four years and rationalization of custom duty. The determination towards GST and the proposed implementation will boost the industry through the state of art indirect tax system.”

BhaskarPramanik, Chairman, Microsoft India:

The service tax rate going up is a concern, because of the impact it could have of driving people to use pirated software. Especially, because of the dual tax on software – the net tax rate for software is above 20%.

The reduction in corporate tax, albeit over the next four years has certainly welcome. More because it also comes with the reduction of exemptions. Exemptions create confusion. I welcome the simpler framework the Government is proposing.

AltafHalde, Managing Director – South Asia, Kaspersky Lab
Therationalisation of service tax by including education cess is a good move. The increase will however impact our software sales. However, reduction in corporate tax is encouraging.  The affirmation in the speech of Finance Minister Mr. ArunJaitley, addressed the lost confidence among corporate India.

 Anil Chaudhry, Country President and Managing Director, Schneider Electric India :

The Government’s impetus to prioritize renewable energy is also clearly highlighted in the Budget with the target for renewable energy capacity revised to 175,000 MW till 2022, with adequate focus on solar power. The decision to electrify 20,000 villages with the help of solar off-grid solutions offers an excellent opportunity for businesses to scale up their solar offerings in rural areas.

An announcement of direct or indirect tax benefits for the adoption of energy efficiency measures would have been welcome as it would have served to bridge the gap between energy supply and demand.”

Amazon India:

We are very encouraged by the commitment to implement GST by April 2016 and focus on development of infrastructure.  We believe both are key to ease of doing business by enabling and streamlining the movement of goods and services.

 AlokOhrie : Budget 2015 Comment

Some of the forward looking statements made by the Finance Minister have a bearing on our sector – exemption of SAD, reduction of Basic Customs Duty on electronics components, inputs etc., ease of doing business, encouraging startups and the big boost to healthcare. However, we’ll need to review the notifications before any predictions could be made on the impact on the sector.

Amar Babu, Managing Director, Lenovo India and President, MAIT

“From an IT industry perspective, it is a mixed bag with the inverted duty structure being finally addressed with the removal of SAD on all components. The removal of customs duty on components and concessional structure of 2% without CENVAT credit are positive steps to encourage tablet manufacturing in India. However it disappoints as no initiatives have been taken to increase PC manufacturing and promote exports.  In this budget, we might have missed an opportunity to drive ‘Make in India’ in computers. We could have improved capacity utilization of existing facility if we had the right enabling structure for local PC manufacturing.”