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Budget leaves channels unhappy

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CIOL Bureau
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NEW DELHI, INDIA: The IT channel partners aren't a happy lot post the budget announcement.

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While the reduction in excise duty from 16 to 14 per cent has been welcomed by the partners, the partners are of the view that it could have been as low as 12 per cent to further boost their business.

They also indicated that exempting certain raw materials used in IT hardware products from custom duty is a smart move taken by the government. However, bringing customized software under the service tax net has not gone down well with the partners.

Saket Kapur, CEO of Delhi based Green Vision feels that the budget is well suited for the farmers and the IT industry has nothing as such to look forward in it. “Packaged Software has become more expensive and this is not a good sign for our business. Besides, service tax has been implemented on customised software and it has now becomes 12.6 per cent more expensive."

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"In addition, certain raw material to be used in the IT hardware products have been exempted from custom duty and this is a good sign for the importers and people looking to manufacture IT products in the country. But again in India companies have to adhere to several compliance issues and the government should look in this direction. The other good point about the budget is that excise duty has been reduced from 16 to 14 per cent and this will affect our business positively," he added.

Ajay Kumar, CEO, Delhi Park Electronics, another channel partner, said, “Exemption of custom duty on certain raw material used up in the IT hardware products is a clear indication from the government that it wants to encourage manufacturing in India. However the budget does not have much for the IT industry."

"Hiking excise duty on packaged software is not at all a welcome sign from the government and this will affect the IT industry to a considerable extent. However exemption from custom duty on certain raw materials with regard to IT hardware products implies that the sale of PCs will increase alongside giving impetus to manufacturing within the country," said JP Modi, CEO, of Delhi Modi Peripherals.

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Rajeev Khanna, president, Jalandhar Computer Dealer's Association, said, "We had always wanted that besides exemption in custom duty the government also reduces the excise duty and the proposal to reduce excise duty from 16 to 14 per cent will help us expand our business further."

"Exempting certain raw materials used in hardware products from custom duty will affect our business positively besides encouraging manufacturing of IT products, something that the industry was looking forward to. This also implies more business for us as the penetration of laptops and desktops will witness an increase further. The excise duty has been reduced from 16 to 14 per cent, though we were expecting it to come down to 12 per cent, and this is a smart move by the government," added Jayesh Mehta, an IT trader in Chennai.

(With inputs from Pooja Sharma)

(cmn@cybermedia.co.in)

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