Union Budget 2013-14 for SMEs

BANGALORE, INDIA:NASSCOM welcomed the Union Budget 2013 terming it as `responsible and reasonable' given the need to balance the imperatives of growth and inclusion, under the constraints imposed by the current state of the Indian economy and still tepid global recovery.

The focus on SMEs and start-ups will definitely help to boost entrepreneurship in the country. Angel investing is critical for the country and the recommendations on structuring this through SEBI and providing pass through benefits is a step in the right direction. However, it would be important to amend Section 56 to make this applicable to investments above Rs. 5 crore. NASSCOM will work with the Indian Angel Network and SEBI to take this forward.

CSR contribution being made applicable to technology incubators in academic institutions will enable innovation. Access to funds through easing restrictive conditions of listing on the SME Exchange can potentially enable access to funds for innovative and young start-ups in India.

Many of the issues raised by NASSCOM regarding tax incentives for STP/SEZ/EOU units like eligibility for onsite services, R&D services etc had been addressed through the CBDT notification on the Rangachary Committee recommendations. The Finance Minister has stated that another circular covering Development Centres will be issued shortly while rules on safe harbour provisions will be considered after recommendations that are currently being finalised received by 31 March. NASSCOM is hopeful of a final resolution within the suggested timeframe.

The thrust on technology adoption through widening the core banking solutions and e-payment systems, leveraging post offices for offering real time banking services is likely to offer long term benefit towards financial inclusion.

Some of the areas of disappointment include:

No specific thrust on boosting high value exports

Substantial increase in tax on royalty, however, DTAA offer a cushion

Exclusion of IT sector from the ambit of the investment allowance which has been extended to the investments related to plant and machinery

No mention on service tax related issues both pending and new rules

No clarity on retrospective levies

Levy of a 20 percent withholding tax on buyback of shares by unlisted companies

Source: www.nasscom.com