Budget to hit Infy margins by 1.5 p.c.

BANGALORE: IT services major Infosys would suffer a net margin impact of 1.5 per cent as a result of the extension of Minimum Alternate Tax (MAT) that amounts to 11.2 per cent to the IT industry.

Finance Minister P Chidambaram announced this in the budget, and this does not seem to have gone well with the industry.

“There are two things that impact the industry-that of Employee Stock Option Plan (ESOP) coming within the FBT ambit and also the MAT. The FBT will make ESOPs unattractive now,” Infosys CFO, V Balakrishnan told CyberMedia News.

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Wipro CFO Suresh Senapaty has said the government's proposal to bring employee stock options plan under fringe benefit tax was also "unfortunate".

Balakrishnan said that as expected, the focus of the budget was on education and agriculture. He appreciated some measures such as allocation of the reverse mortgage scheme for senior citizens and emphasis on education.

Infosys and other IT stocks like TCS, HCL, Satyam, Wipro and others took a tumble in the stock market following the budget. The stocks registered losses between 3-5 per cent in the afternoon trade.

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