Damp squib for IT industry (Business Line -Java Training Courses)

Mar 19
08:27

2012

Ramyasadasivam

Ramyasadasivam

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There is nothing specific to the information technology sector that is either a strong negative or positive, said Mr Partha Iyengar, Regional Research Director, Gartner India.

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 There is nothing specific to the information technology sector that is either a strong negative or positive,Damp squib for IT industry (Business Line -Java Training Courses) Articles said Mr Partha Iyengar, Regional Research Director, Gartner India.

His comment probably sums up the huge disappointment for the industry in the Budget.

In fact, in the Budget speech, there was no mention of the words ‘software' or ‘information technology,' a sign of the lesser importance to the sector. Except for references to Aadhaar and e-governance, there was nothing worth mentioning about for the sector.

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Call up any of the contacts in the industry for a reaction, they refuse to talk. “What's there to talk? You tell me what was there for the industry, which is worth mentioning,” said an official of a large Indian software company who did not wish to be identified.

The industry had a long list for the Finance Minister as it was marching towards achieving revenue of $225 billion by 2020 from the present $69 billion. The foremost was exemption of Special Economic Zone income from Minimum Alternate Tax. This was not considered by the Finance Minister, which is very disappointing, said Mr. N. Chandrasekaran, CEO and MD, Tata Consultancy Services. Most of the IT units in India are today located in SEZs across the country.

The tax holiday for Software Technology Parks/ Export Oriented Undertakings expired on March 31, 2011. While no extension was considered in last year's Budget, the industry was hoping for a re-introduction of tax holiday, especially for small and medium enterprises

Transfer pricing

The industry also wanted the Government to work out rules to notify the metrics for transfer pricing adjustments. This was given a deaf ear to by the minister. For the industry, the ‘advance pricing agreement' will be useful to ease transfer pricing litigation, said Mr Chandrasekaran.

With the IT companies going beyond the metros, the industry was hoping for some incentives to expand in tier-II and III cities. There was nothing on this count in the Budget, lamented an industry veteran.

Safe harbour provisions and introduction of Advance Pricing Agreements are eagerly awaited in the backdrop of compounding transfer pricing disputes.

The industry was hopeful of the government removing the double taxation (service tax and value added tax) on right to use software, maintenance contracts also needs to be addressed. However, it was disappointed.