K'taka reduces VAT on software licenses

BANGALORE: The Karnataka government today proposed to reduce the value added tax (VAT) on software licenses from 12.5 per cent to 4 per cent, effective from April 1, 2007.

While presenting the State budget 2007-'08, BS Yediyurappa, deputy chief minister and finance minister, informed the Assembly that the government has set aside Rs 3 crore for the development of nano-technology.

"IT and BT sector is not seeking any direct tax or non-tax concession. They are seeking upgradation of infrastructure at Bangalore and other parts of the state. The investments made in infrastructure and urban development sectors bear testimony to our commitment,” Yediyurappa said.

The Karnataka government has earmarked Rs 800 crore for the development of infrastructure in Bangalore.

“The State government will be spending over Rs 100 crore on development of physical infrastructure such as roads, underpass and sanitation,” the minister announced.

The government has also allocated Rs 50 crore for the development of smaller airports in Bijapur, Belgaum, Shimoga, Hassan, Mysore and Gulbarga.

On the Rs 3 crore allocation for the development of nano-technology sector in the State, the minister said, “Nano Technology is emerging as a new branch of science. This sector may open up new opportunities. To make a beginning in this direction I propose to allocate Rs 3 crore. If need be more funds will be allocated for this purpose later.”

Disaster recovery centers

The State is planning to set up a disaster recovery centers for government records in Bangalore and Dharwad.  “In order to provide better service to the public and further strengthen the existing initiatives, I propose to constitute Kaveri Monitoring Cell. I also propose to establish Data storage and Disaster management Center at Bangalore and Dharwad for storage and preservation of permanent records,” Yediyurappa said.

Meanwhile, Karnataka is setting up a regional science center in Dharwad. “Along with this, our government is planning to set up district level science and technology centers. This government is setting aside Rs 5 crore towards this,” he said.

The budget also allocated Rs 5 crore for various programmes by the Science and Technology department.

Vendors happy

Speaking on the reduction of VAT on software licenses, GS Raghu, managing director, Chira Information Technology, channels partner for Microsoft said that this move would encourage the industry.

“Few years back, Karnataka state has 4 per cent sales tax on software licenses. Two years back, when VAT was introduced in the state, government had imposed 12.5 percent VAT,” he said.

According to him Microsoft Windows Vista business upgrade license will cost around Rs 7080 with 12.5 percent VAT, will now cost around Rs 6550 with 4 per cent VAT.

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