Advertisment

SMEs Need More Support

author-image
CIOL Bureau
Updated On
New Update

BANGALORE, INDIA:

What is your view on the announcement of non-extension of STPI scheme?

Advertisment

The Software Technology Parks of India (STPI) scheme was not extended in the Union Budget of 2011. STPI, which offers tax exemption to export oriented units on profits under Section 10A and Section 10B of the Income Tax Act, was extended by one year till March 2011 in the Budget last year. However, the Finance Minister has announced reduction in the tax on revenues from foreign subsidiaries of the Indian companies.

The move shall boost the margins of large IT companies. But small and medium enterprises are going to get a hit from non tax exemption. The STPI created a vibrant IT SME sector that currently employs more than a million professionals. However, the abrupt withdrawal of the scheme may scrap the overall idea of STPI itself.

How is the proposed GST implementation in 2012 going to be beneficial?

Advertisment

No date for implementation of GST has been announced. The indirect tax regime in India is proposed to be replaced by a comprehensive dual GST with Central GST and State GST to be levied concurrently by the Centre and the States.

GST structure would include imports while exports would be zero-rated. For inter-State transactions in India, the State tax would apply in the State of destination as opposed to that of origin. GST will have a significant impact on almost all aspects of businesses operating in the country, including the supply chain, sourcing and distribution decisions, inventory costs and cash flows, pricing policy, accounting and IT systems and transactions management.

Also read: India, S Africa agree to boost MSME Sector

Advertisment

What do you think about the fund allocation of Rs. 5,000 crore to SIDBI?

A part of fund is used by SIDBI to refinance and the rest is directly funded to the SME units. MSME feels if the entire fund is directly given to the SME units, it would simplify the procedure for the units. The outlay should have been more keeping in view the huge requirement.

How will IT firms be affected by MAT (Minimum Alternate Tax) increasing from 18 per cent to 18.5%?

Advertisment

SEZs are given 100 per cent tax exemption for the first five years, 50 per cent for the next five years and 50 per cent of the ploughback of the export profit for the next five years. Many companies have invested heavily in SEZs. The IT companies are recovering from the economic slowdown of 2008-09.

The larger companies bounced back in 2010, and the SME sector is still in the recovery phase, as they are forced to compete with the emerging IT-SME community in other countries. Indian IT-SMEs need unconditional support from the Union Government. The 18.5 per cent MAT will have a huge impact on the IT SME companies.

Source: www.dare.co.in