Major Indian cities get Rs 5000 cr

BANGALORE: Union finance minister, P Chidambaram did not have any specific handouts for the IT industry but, preferred to focus on overall development on areas like rural development, agriculture and education. What would be heartening to the IT industry is the emphasis on infrastructure. Acknowledging that there was a glaring deficit in infrastructure, Chidambaram proposed a special purpose vehicle for investment in roads, ports and other infrastructure.

"Under the national urban renewal mission, seven mega cities would be covered with plan outlay of Rs 5500 crore in FY06."

The government has decided to go ahead with the VAT implementation starting April 1^st. IT software is exempt from the countervailing tax while hardware will carry a 4% CVD on IT products. To encourage emerging companies, he also said that SMEs in the pharma and IT sectors will get equity support.

As envisaged by President Abdul Kalam, the finance minister announced the Bharat Nirman program, which he described as a "business plan for developing rural India". The minister also stated that telephone connectivity would be extended to 62,000 villages and efforts would be made to increase the teledensity in villages.

Perhaps the sectors that have a lot to cheer about are biotech and agriculture. The minister announced the creation of a national horticultural mission with a budget of Rs 630 crore, which will provide end-to-end support in research and marketing. Also on the anvil is a panel for agricultural research.

To encourage BT and pharma companies, customs duties on nine machinery has been reduced to 5 percent.

What would be of interest to Indian companies is that corporate income tax for domestic companies has reduced to 30 percent. The 10 per cent surcharge continues.

Conveyance and canteen allowance to be outside the tax net but all other perks given by employers to employees as a collective benefit will be taxed at 30 per cent. This new tax will be called Fringe Benefit Tax and will be levied on employers.

CyberMedia News

More

"The thrust on infrastructure will not only address the developmental needs of the country but also send the right signals to foreign investors...."



IT INDUSTRY REACTS TO BUDGET 2005-06