BANGALORE: Dubbed as the "Silicon Valley of India", Karnataka, and
the state IT industry had very little to cheer about when the Chief Minister, SM
Krishna presented the state budget for the financial year 2002-03. He has
proposed to re-introduce a sales tax of four percent on software products.
In his budget speech today to the state’s assembly, Karnataka Chief
Minister said, "To comply with the floor rates, I propose to re-introduce
tax of four per cent on software."
On software products costing more, Borland’s country
manager, Ajay Mohan said, "From the industry perspective, it is not good to
impose a four per cent tax on software when we are trying to build Bangalore as
the software hub, which it already is. The imposing of tax on software products,
especially when the IT industry is in slump and when the industry is fighting
hard against piracy, it is going to be tough to deal with the four per cent tax
on the products. I am sure the chief minister had compelling reason to impose
the tax on software products."
Chief minister Krishna has also reduced tax on accessories of
mobile phones, SIM Cards and SMART cards, announcing this he said, "I
propose to reduce tax on, parts and accessories of mobile phones, SIM cards and
Smart Cards to four per cent on par with similar electronic goods."
Apart from mentioning the proposal of establishing a hardware
park near Devanahalli, he left the hardware industry untouched. However, the
industry is rejoicing a lot on his proposals. MAIT deputy director southern
region, K S NandaKumar said, " the proposal to spend on computerization of
ration cards and e-governance will help the local IT industry." He also
says that there is more clarity on the issue of removal of luxury tax imposed on
IT products now.
A grant of five crore rupees has been released for setting up the Institute
of Agri-Biotechnology at Dharwad, as promised in the Millennium Biotech Policy.
He also mentioned the plan to set up a Biotech Park at Bangalore with common
facilities center and incubation facilities
"This year we would announce an e-governance strategy that will improve
quality of service delivery and information availability for citizens. My goal
is that at least five important areas of government service delivery are
available on line. I am allocating Rs.5 crore for e-governance," announced
Krishna.