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IT sector gets attention

CHENNAI: The 2009-10 budget proposal to extend the Software Technology Parks of India (STPI) scheme for one more year will help the information technology industry mitigate the impact of the current economic downturn and help India retain its competitiveness, says Som Mittal, President, Nasscom, the trade body for IT and ITeS (IT-enabled Services) industries.

The Chairman of Nasscom, Pramod Bhasin, said that the industry would be keen to partner the Union Government in expanding e-governance initiatives, including modernisation of employment exchanges, the UIAD project, and smart cards for healthcare services so as to achieve enhanced governance.

The budget proposals also addressed Nasscom’s recommendations relating to multiplicity of taxes on packaged software, creating a dispute resolution mechanism on transfer pricing, abolishing fringe benefit tax (FBT) and issues on service tax refund.

R. Chandrasekaran, President and Managing Director, Global Delivery, Cognizant, said that the extension of STPI would specifically benefit the small and medium-sized IT companies that needed this critical impetus for its growth.

Sujit Sircar, Chief Financial Officer, iGATE, said though the Finance Minister had given an extension of utilisation of MAT credit from 7 to 10 years, considering the increase in the rate from 10 per cent to 15 per cent, there would be a significant strain on the cash flow for IT companies.

Gowari Shankar Subramanian, Chief Executive Officer, Aspire Systems, said on transfer pricing that more clarity would be valuable since businesses need certainty on what they were dealing with.

Ajai Chowdhry, Chief Executive Officer and Chairman, HCL Infosystems, said the industry had demanded cent per cent depreciation on financing of IT equipment which was not included. On taxation aspect, the excise/CVD exemption was unclear as it was not stated whether VAT was included in this or not.

The government had also put a huge focus on R&D and various government schemes, which would require increased role of information technology.

Sandeep Joshi writes from Delhi:

Tata Consultancy Services CEO and Managing Director S. Ramadorai said: “For the IT industry, the extension of tax exemption under STPI for one more year is a step in the right direction as is the abolition of FBT”. Mr. Mukherjee may have missed a trick by not unleashing a wide-ranging e-governance programme to extract more economic efficiencies, he added.

The Manufacturers’ Association for Information Technology (MAIT), representing India’s IT hardware, training and R&D services sectors, welcomed the government’s decision to maintain the current excise and custom duty levels on IT products and components.

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