Nasscom sees a growth-oriented budget

NEW DELHI: Welcoming the Union Budget 2005-06, Nasscom president Kiran Karnik said, "Nasscom welcomes the overall thrust of the Union Budget, which is largely growth oriented. Noteworthy are the lower rate of corporate taxation, and the promise of a stable tax regime, both of which should stimulate investment. Nasscom is pleased with the emphasis on promoting exports and the priority to employment generation, both of which the IT industry does outstandingly well."






"Nasscom is also glad to note the emphasis laid by the Government on investment for the social sector, especially for education, health and infrastructure. We are happy to learn that the Government will join Mission 2007, a national initiative (in which both Nasscom and Nasscom Foundation are centrally involved) to create a knowledge center in every village, which the government now intends to support through NABARD and allocate Rs 100 crore out of the RIDF. This will be further facilitated by the commitment to ensure telephone connectivity to every village, as indicated by the Finance Minister."





"The government has proposed to set up a Knowledge Commission, emphasize primary education (through the Sarva Siksha Abhiyan), develop IISc Bangalore into a world-class university, and upgrade 100 ITIs. It has also announced Rajiv Gandhi Fellowships for research students. These public-private initiatives will help India in building quality human capital required for the IT sector and other knowledge industries. We hope that in addition to IISc, the government will also upgrade other universities across the country."





"We welcome the focus on infrastructure, an issue that has been of some concern to the IT industry, and formulation of a National Urban Renewal Mission. We are delighted that Nasscom's recommendation of reducing the rate of taxation of fees for technical services' (FTS) and 'royalty' to a maximum of 10 percent has been accepted. This now needs to be incorporated in the Double Taxation Avoidance Agreements with other countries."





"We are happy that IT software has been exempted from countervailing duty, as the customs tariff comes down to zero, for a whole list of IT related items, under the IT agreement of WTO. We hope this will lead to price reductions for hardware, and stimulate the domestic IT market. The launch of the Manufacturing Competitiveness Program and allocation of funds for Technology Upgradation Fund will also give a boost to the domestic IT market. Nasscom welcomes the government's decision to provide equity support to knowledge-based industries, especially IT, through the SIDBI SME Growth Fund. Nasscom would be happy to partner with SIDBI to further provide an impetus for SMEs to grow and innovate."





"Nasscom and the industry is however disappointed that taxation issues related to the BPO industry have not been resolved. These are holding back more rapid growth and larger investment and employment in this industry. Another point of serious concern is the proposed taxation of fringe benefits. The definition needs to be modified, so as to explicitly exclude all items of genuine business expenditure. Nasscom is hopeful that the Government in the final Finance Bill will take note of these concerns and also incorporate some of our other recommendations."